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INVESTMENT CLUBS - 101 SUHASINI GANDRA EDCI 591
Objectives • Define investment clubs • Explain the advantages/disadvantages of investment clubs • Explain how to start/join an investment club
Investing • As more people plunge into debt, financial planners advice us to save and invest wisely • What better way to learn and invest than being part of an investment club. • Today there are more than 35,000 investment clubs nationwide. • What do these clubs do?
What are Investment Clubs? • An investment club is usually made up of group of people (10-20) who jointly invest in stock market. • Successful investment clubs focus on learning as well as investing. “The safest way to double your money is to fold it and put it in your pocket.”
How Do They Work? • Investment clubs meet once or twice a month to study, vote on administrative matters and decide whether to buy or sell stocks. • NAIC (www.betterinvesting.org) is the best resource for investment clubs. • The two common voting methods: • One member one vote • A weighted vote based on ownership percentages
Why to Start/Join an Investment Club? • You're new to investing. • You'd feel more comfortable learning about investing with others than on your own. • You have roughly $20 to $50 that you can invest each month. • Friends have gently suggested that it would be good for you to get out of the house once in a while. • You're an experienced investor, but it would be helpful to discuss ideas with others.
Benefits • Dollar cost averaging (consistently investing in the market) • Financial literacy • Access to more investment choices • Lower fees/commissions due to the larger size of purchases • Investment diversification • Wonderful way to spend time with friends and family
Disadvantages • All the members have to contribute their time and money • Investment philosophies of members will be different - leads to conflict of ideas
Club Basics - Starting/Joining and Club Management • How to start/join an investment club? • How do the investment clubs operate? • Are there any legalities involved in operating these clubs? • www.betterinvesting.org
Conclusion • Investment clubs are a great way to brainstorm ideas, share knowledge, and also make money • But, as with any enterprise that mixes friends and money – everyone should agree on the basic ground rules. Then all you have to do is pick the best shares!