How can I Start an Investment Club?

Diana Bocco

The best way to learn about investing and the stock market is to start an investment club. An investment club is basically a group of people who pool funds to invest jointly.

Man climbing a rope
Man climbing a rope

The first thing you need to do to start an investment club is to find members. In-person clubs work better than online ones because it's easier to settle matters when you can see the other person face to face. It's also better if you limit the number of members to no more than 15. This makes it easier to manage while still being big enough to accumulate enough funds to invest.

During the first meeting, agree on the basics. When you start an investment club, you need to make sure everybody is on the same page. How much will each member be expected to contribute? Will this amount be the same for everybody or is there freedom in numbers? If you decide on the latest, there should be at least a minimum monthly contribution set for all members. Also, make sure you agree on how often you will meet, for how long, and where. There should be some kind of format to the meetings, so members know what to expect and how long they'll be there. Setting up a committee and giving everybody a role, such as presiding partner and secretary, can make things easier to handle.

When you start an investment club, it's also important to agree on how you will invest. Will you use a broker or do things on your own? For beginners, discount brokers, who only provide guidance but do not take a full commission or offer buying suggestions, may be the way to go. If the members decide to bypass the broker, then you need somebody who will research the options and be in charge of accounting.

The hardest part is not to start an investment club, but to keep it going. Experts agree that, for beginners, this may mean investing on safe stocks and looking to long-term returns rather than quick cash. But no matter how you do it, when you start an investment club, you're taking control of your financial future, and that in itself is one of the biggest rewards.

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