Stock Investment Clubs - Should You Join?
What's a stock investment club? How can it help you? How can you get involved with one?
Everybody wants to get rich quickly. But if you’re comfortable with getting rich slowly then you may be interested in joining an investment club. In a group of 10 to 20 people, these clubs purchase stocks as a single entity. Members contribute a monthly allowance to buy the stocks, and every month the club selects a new stock to invest in.
How do the clubs operate?
Some clubs' function solely to make money, while others meet in a more social atmosphere. Some people prefer a social club because it allows them to spend time looking at stocks and discussing how to make the best investment. However, other clubs function just as successfully by allowing one member to make all stock decisions.
How to find a club:
Though you’ll be able to find many existing clubs, most operate on strict rules and may not be inclined to let newcomers interfere with their success. You may find it easier to search around and find persons who would be interested in starting your own investment club.
How to get started:
A club should gather people of a common interest. Choose members who are trustworthy and will work well together. Before you start you should be aware of how much time and money each member is willing to contribute. Have members sign a contract that explains the terms of joining and exiting the club. Make sure that you determine the following:
- A regular meeting time and place for the group,
- How much money group members need to put in, and when to do it,
- Who the group’s broker will be,
- Who will keep track of all financial transactions.
Lastly, be sure to obtain a tax identification number from the IRS. You will need this to avoid tax problems in the future.