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The Risks and Rewards of Investment Clubs

Aug 17, 2007
While being part of an investment club will build your confidence with the stock market and work to reduce your personal risk, there is no way to make investing completely safe or stock markets easy to understand. With unpredictable swings in prices, bull and bear phases, and stories about people making and losing millions overnight, stock markets can be an intimidating to a beginning investor. This is part of the reason why many investment clubs begin. They are a good place to start out, to keep your risk reasonable, and to study the market.

Remember, investment clubs don't remove risk. Whenever you invest your money in the stock market you could lose that money. There are no guarantees. You have to be very aware of the fact that you could lose your investment overnight. If your financial goal is to save money safely so that you can retire, there may be other investment choices that may serve you better.

However, if you're willing to take some risks, and give your money a chance to increase in far greater amounts than most other investment options, you have the perfect personality to be part of an investment club.

People who are part of an investment club are willing to take reasoned chances so that they can make a good profit, all the while enjoying the entire process of the stock market. But they are also sane and rational when it comes to their money, wanting to retire with a nice sized nest egg. Investing in the stock market is one way to make large sums of money while having fun.

However, when you invest in the stock market you need to be prepared for there to be periods of time where you're operating at a loss. During those periods when the market is slow you may think you'd be better off putting your money into a savings account. But if you're patient, and ride out these patches, your profits are likely to be much higher than just accumulated interest.

When you're part of an investment club you're combining your money with other investors who will patiently wait with you through the slow periods of the market for your investment profits to pick up again. This combined value of your investment helps you to realize greater profits. And the support of the group will enable you to wait out the downturns in the market.

Need more reasons to consider joining or starting an investment club? Consider these:

You have the chance for much better results and profits than when you invest your money in annuity savings or into the bank. Your money will also be much more liquid, allowing you to take advantage of more profit making opportunities. You'll have more control over where your money goes, what you do with it, and how much of it you want to invest, and where.

You have the ability to realize some dreams in your life that you may not be able to meet without the profit that you could make from investing. Playing the stock market can mean taking some of your dreams and making them a reality.

You'll become much more knowledgeable about the investing and business environment. If you already have an interest in investing then being part of an investment club is a great way to learn more and to share your interests with other people. You'll be able to meet on a regular basis with people who are learning about the stock market right beside you.

When you invest in the stock market you're taking your finances into your own control. You won't be counting on the government for your future financial needs.

You need to weigh the risks and rewards of being in an investment club with your own thoughts and feelings about money and savings. If you find that the rewards outweigh the risks, then you will find that an investment club may be the perfect way for you to take charge of your finances and work towards the profits the stock market brings to many committed investors with a group of people who will understand and support your choices.
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