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9 Tips To Starting An Investment Club

Aug 17, 2007
An investment club can take some time and work to start up, but it can be a lot of fun and very educational during the process. Investing in a group allows more money, more knowledge, and a feeling of partnership. Trust will be the main key.

1. Find compatible members for your club. You will probably want between 7 - 15 members for your club - too many can get very unwieldy and difficult to schedule, but too few will not allow enough capital to really invest.
2. Determine common goals for the group. Some people may want to get into get rich quick business, and investment clubs may not work well for these people.
3. Decide how much money the club will invest on a monthly basis. Some may want to invest a larger amount than others can afford or are comfortable with.
4. Form a plan for how the club will operate. Include rules about how money will be handled, what will happen if someone needs to withdraw their money, and how often the club will meet.
5. Fill out the paperwork. Form a Limited Partnership company (if that is what you choose - this can be the easiest way to start your business), and fill out the tax forms, as well as perhaps joining the NAIC. You may also have to register as a business in your community.
6. Select jobs. Have individuals fill in roles that you decided on in the plan. You might want to rotate jobs from meeting to meeting, so as to spread out the work, or you might have people specialize.
7. Choose a president, vice president, secretary and treasurer. You may also have a person in charge of education, whom would coordinate special guests who speak to the qroup.
8. Open a bank or brokerage account - you will need a partnership agreement or an operating agreement in place before you do this, as the bank or brokerage firm will require one to open a business account.
9. Set up a budget for the club. Record initial membership contributions, as well as determining what monthly contributions will be. You may also want to discuss having experts come in to talk with the group, so as to learn more about investing. Money for this may come out of monthly contributions, or may be added on to that month's expenses. Discuss this in advance to avoid misunderstanding.
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