The first investment club in the States started more than 100 years ago and there are now some 60,000 clubs with more than a million members in the US. Clubs are fast becoming just as popular here as the idea captures the imagination of people in the UK. The reason? Investment clubs are a great way to increase your knowledge and ability as an investor, in a friendly and fun environment.

Whether you are an experienced investor or a complete novice, there are many reasons to get involved in an investment club.

If you are a new investor, there is no better way to start investing as the stock market can be a daunting place for a lone investor. In a club situation, risks are shared as you are pooling your subscription as part of a group of up to twenty people. Better, more sensible decisions tend to be made collectively as you share your knowledge with others. You may have no knowledge about the stock market itself, but you will certainly have knowledge from your work, your hobbies or just life in general which will mean that you have expertise of a particular industry, company or service to contribute to club meetings - and your confidence will soon grow. Many clubs have an educational programme for new members and you will be surprised how much you pick up from reading newspapers, listening to relevant programmes on the TV and radio, the internet and ProShare’s Dividend magazine. If you are an experienced investor, you will enjoy sharing your interest with friends or colleagues and while you might give some less experienced members the benefit of your stock market knowledge, you will certainly learn something from other members because they will have knowledge of different sectors and companies through their work or leisure pursuits. The research involved in investigating companies can be shared between members, as can the cost of information, in the FOREX Market the Currencies are traded in pairs, which will be handle by P.A.M. But you’re incourage to look into this market as well. I would like to remind you that there is allot of education and practice that goes into trading with conferdance.

Investment clubs serve as a terrific way for those new to investing to learn more about it in a friendly group setting. Many people are terrified of taking their first investing steps and clubs make this relatively painless, as members cough up modest sums and invest carefully together after deliberating over the pros and cons of any action.

Many members eventually find that the clubs guide their own personal investing. After a while, their equity in the pooled club account may be relatively small compared with their separate personal accounts. Club meetings will offer many good ideas of attractive stocks in which to invest — and while the club may buy a few shares, members often go home and buy more shares for their own accounts. You may not have the time to research several stocks each month on your own, but by participating in a club, you’ll share in the research of others and have the extra bonus of a group setting in which to discuss investing ideas and issues.

Clubs: The learning advantage.

A traditional investment club is a small group of individual investors who come together to learn, share investing experiences and help each other become more successful investors. Clubs provide education, companionship and buying power, plus the confidence of knowing you don’t have to go it alone.

Investment Clubs are a great way to learn and apply investing skills in a friendly, pressure-free atmosphere. At group meetings — usually held monthly — members pool their investment dollars, review studies of stocks presented by club members, and select one or more stocks, and now currency pairs to buy, based on BetterInvesting’s proven investing approach.

*Can you wait for your money, to work for you?

Note:

***In 1957, Bill and Carol Angle invested $30K with Warren Buffett. Now, their stake is worth more than $300 million. You know the Berkshire miracle is once in a lifetime, but we’ve found another that looks uncannily similar***

***The bottling of Coca-Cola was begun in the county at the turn of the 20th century but its real value to the area came through the purchase of Coca-Cola stock. Many legends circulate about the personal fortunes gained from Coca-Cola investments. Miss Julia Munroe Woodward, daughter of banker M. W. “Pat” Munroe says, “Daddy liked the taste and he figured folks would always have a nickel for a coke.” Prices have gone up but “Mr. Pat” encouraged family and friends to invest in the stock before the beverage attained its world wide prestige. The increase in value resulted in a good many “Coca-Cola millionaires” residing in the county. One estimate says that there were 67 of them and another says that at one time, more Coca-Cola stock was held in Gadsden County than throughout the rest of the country. Whether that is legend or fact, Coca-Cola is the drink of choice of many families in Gadsden County.***

(I Guess you wonder why I Placed these ture facts; it is the ability to see oppertunity and act upon it)

- Start talking with friends and see who’s interested. It’s best to gather a variety of people who will bring to the club a variety of interests, experiences, and perspectives. Once you find a few interested friends, let them invite a few of their own friends. Aim to form a club with roughly 10 to 15 members, give or take a few. Anything from 6 to about 20 is probably workable. Too few and you may have trouble accumulating funds to invest. Too many and you’ll have trouble having quality discussions and finding a place to meet.

- Don’t assume that you’re doomed if your group is composed only of utter novices. That can be a very good thing. Sometimes, if you mix in some sophisticated investors with novices, the sophisticates can get bored or frustrated, and the novices can get intimidated. Don’t doubt that a bunch of novices can tackle learning everything together. (Remember, you have a lot of resources to help you, such as the online community.)

- Distribute information about investment clubs to anyone who has expressed interest. Perhaps print out the material you’ve found here. You want people to learn what investment clubs are all about and think about whether they’re really interested.

- Gather all interested parties for a preliminary meeting. Meet to discuss (A) whether you have enough in common, (B) how you’ll be organized and run, and (C) whether people are still seriously interested in forming a club. The following items are things that you should try to agree on. It might be good to go around the room and get everyone’s thoughts on each of these issues.

- Make sure that you all have similar or compatible investing goals. If some people want to double their money in two years and then get out, that’s not only unrealistic, but also probably at odds with those who want to learn and slowly grow their savings.

- Agree on the amount of the monthly minimum contribution. You don’t have to set this as high as possible. Remember that this is a learning activity, and you can always increase the amount at a later date. Many clubs allow members to contribute more than the monthly minimum level if they so desire. Also, contributions to the club shouldn’t necessarily be the only investment you make. Note; that in the Forex or Currency Market you Don’t have to contribute any more monies to the investment clubs. However you can still meet to invest in other markets, and keep in line with your charter.

- To the degree that you can, agree on some common ground regarding a general investing philosophy and approach. As an example, perhaps you agree that Warren Buffett’s approach is one you’d like to incorporate or emulate. Maybe many of you believe in Foolish investing tenets. Perhaps some want to find significantly undervalued stocks, while others want to find high-flying stocks. Differences don’t necessarily represent a death knell, but it’s good to start out knowing how everyone feels. And besides, many investment styles are not diametrically opposed. Fools and Warren Buffett have much common ground.

- Agree on a regular meeting time, place, length, and format. One reason to try and keep a club size to no more than about 15 people is that it permits meetings to be held in living rooms. Another possibility is to seek out some other space, like a local library or church. A coffeehouse or local watering hole might also work. Perhaps a member has an available meeting room at his workplace. Decide when you’ll meet, and how often. Most clubs meet once a month. For the format, outline the various items of business you plan to cover at each meeting and allocate an amount of time for each. This will help you keep meetings running efficiently and prevent someone’s report from going on for an hour and dragging things out too long. Most meetings will probably last between one and two hours.

- Agree on snacks. Snacks can be a very important part of any meeting. In unfortunate situations, it might even be what meeting attendees look forward to most. Your club can choose to bypass snacks — or you can decide to take turns bringing donuts or cookies.

- You’ll need a name for the club. You can be straightforward and name the club after something like your geographical region, or you can be creative. Names that some clubs have used include: The Money Makers, The Small Wonder Investment Group, Blue Chips and Salsa, The Common Bond Investment Club, Common Cents, The Fortune Seekers, The Steady Plodders, The Live and Learn Investors, The Silk STOCKings Investment Club, Stocks and Bonding, Blooming Assets, Lady Investigators, The Hounds of Xemba, The Stockettes, Fortune Hunters, Dynavestors, and so on. One group of women named their club the Stroke of Luck because they all met at a doctor’s office. Their husbands had had strokes, leaving the women suddenly needing to take control of the family finances.

- We’ve covered a lot of ground so far. If this has taken a long while, you could close the first meeting and resume organizational discussions at the next. There’s no rush. Below are more (yes, more) things to settle as you set up your club.

- Agree on how you’ll be organized legally and operationally. The NAIC guide noted above, you’ll need to have formal agreements in place to protect yourselves in case one member turns out to be a dastardly demon. Don’t neglect this paperwork issue. For your club to be recognized as a legal entity, there are forms to fill out.

- As part of the previous discussion, you’ll have determined how your club will be organized — or at least will have begun talking about it. Finish that now. Agree on what responsibilities there are, and what kinds of officers you’ll need to elect to take on these responsibilities. Clarify what the responsibilities of the officers, as well as club members, will be. (Remember that even regular, non-officer members have responsibilities.) Elect your officers in one of the first meetings. Typical clubs have:

A president/presiding partner, who sets meetings, presides over them, and plans activities.
A vice president/assistant presiding partner, who fills in when needed and might also run the education program.
A financial partner/treasurer, who deals with the brokerage, buys and sells stock, and keeps records of the club’s holdings as well as each member’s share. (This needs to be a careful, detail-oriented, and responsible person.)
A recording partner/secretary, who keeps minutes of each meeting, reminds members of meetings when necessary, and possibly mails out minutes to members who miss a meeting.
Some clubs have a separate education officer, responsible for planning (with the input of the group) an educational program, which might include presentations, field trips, guest speakers, and assigned reading.

- Come up with some more inspired names for offices. Some examples are below:

Pres
V-Pres
Education
Finances CFO
CEO of Minutes and Agendas
Superintendent of Snacks

- Assign someone to look into choosing a broker. Some clubs have traditionally favored full-service brokers, who’ll provide some advice and guidance and perhaps even attend meetings on occasion. You can actually sign up for an account there, too!

- Decide on an educational agenda. This will naturally change a bit over time, as you become more sophisticated investors. But it’s important to start out with some kind of plan. Perhaps you want to take the first few months to learn how to read annual reports. If you’re already comfortable with that, you might delve into various valuation methods. Discuss topics of interest and set up a plan for learning.

- Make a list of member interests and expertise. Here’s why. As you begin hunting for companies in which to invest, you’ll want to choose industries to study. As both Peter Lynch and the Brothers Gardner like to point out, it’s a great strategy to “buy what you know.” (Actually, it’s probably best restated as “research what you know.”) If you’re in the chemical business, you might volunteer to look into companies in that industry, choosing a few for a close look. If a member is an avid golfer, she might look into golf-related companies. It’s a good idea to make a list of the industries with which your club members are familiar. Even if someone’s only hobby is hitting the malls every weekend, that’s a great boon — he’ll be familiar with many retailers.

- Finally, agree to have fun and to keep your meetings friendly and cooperative.

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