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What are Investment Clubs?

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  • Written By: Bryan Pedersen
  • Edited By: Lindsay D.
  • Last Modified Date: 14 July 2018
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Investment clubs have been around for many decades and have been growing in popularity due to increased interest in the stock market. By joining investment clubs, users are able to pool their money to increase their buying power, share their collective knowledge, and socialize while making their investments.

Typical investment clubs usually meet once a month. Members take turns researching investments and then share their ideas with the other members of the group. These meetings also serve as an occasion for members to contribute to a monetary fund used for purchasing stocks, mutual funds or other types of investments. For the procrastinating investor, this may be a huge benefit. In order to remain a member, he or she will need to make the monthly dues.

One of the goals and benefits of investment clubs is the opportunity to learn. Successful clubs generally put as much effort into researching and learning rather than just simply buying. Experts in the field can serve as guest speakers for the group, and there may be required reading of books and other publications before each meeting. Purchasing this knowledge is more cost-effective than if an individual were to just do it alone.

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Starting investment clubs does not have to be difficult, and due to the educational aspect, does not require any special knowledge. A group of friends or co-workers usually comprise a club, making them a safe environment with a strong comfort factor. Beginner topics such as how to read stock listings, or how to calculate P/E ratios are excellent ways to start out. Later, the group can graduate to much more advanced topics as both the knowledge and the financial capital of the group increases.

While investment clubs are excellent choices for the beginning investor, they aren't limited to just people new to investing. For the veteran investor investment clubs offer an opportunity to learn from other experts, or as a free way to learn about new industries and markets. Rather than paying a professional, all that's needed is to share some knowledge in return.

It is calculated that investment clubs today hold more than $175 billion dollars of equities. This amount of money rivals even the largest mutual funds, making them a powerful force. For an investor looking to earn some returns on his or her money and learn a lot in the process, there is no better value.

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anon30278
Post 2

I am a member of an investment club and I find it very educationally rewarding. Since most Investment Clubs are structured along democratic ideals (one member = one vote) I occasionally lose in a vote to purchase or sell a security. I find this a *very* small price (being outvoted) to pay vs. the investment education I receive when investment discussions take place. At each monthly meeting we try to have an educational section, then the business section (buying & selling) and I learn from both. There is also a social component. We try to have a club-paid, annual event (spouses invited), which add another dimension to the club. Clearly, I recommend joining or starting an Investment Club. Beginners and experienced investors could benefit.

Michael

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