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How do I Start an Online Investment Club?

N. Kalu
N. Kalu

To start an online investment club, you first need a group of people willing to invest. You can start by asking friends, family or coworkers if they are interested in placing their funds in a mutually beneficial investment. Next, it is important to determine what sort of legal entity the club will be. Finally, the internal operations and goals of the club must be outlined clearly for potential members.

This will be an online investment club, so it is possible to find members through investment message boards and forums. You can post a call for members online in addition to recruiting friends and family. It is important to consider how many members your investment club can handle. If there are too few, there might not be enough assets to pool together, but if there are too many, the club's website could become difficult to scale in the future.

Man holding computer
Man holding computer

Next, you should research different legal entities and select which one would better suit the needs of your online investment club. Becoming a corporation likely would require too much tax from your investment funds. It also requires a lot of paperwork and accounting. Generally, it is not the best choice for this sort of club.

A general partnership requires less paperwork than a corporation. It also passes on the tax to each of your individual investors' tax returns. Most investment clubs incorporate as a general partnership.

There also is the possibility of a limited liability corporation. This business framework gives your online investment club more liability protection than a general partnership. It also is more expensive and requires a great deal of work to set up, much like a corporation.

After you have decided on a business model, it is time to map out the online investment club's operations. Start by drafting a mission statement that you will post to the club's website for all to read. The mission statement should include a three- to four-sentence description of your club's membership interests and goals.

It is important to determine how much money each member is expected to invest. You can decide to have all members contribute an initial lump sum or have each member contribute a minimum amount each month. Most investment clubs have members invest money each month.

Club organization also must be considered. It is absolutely critical to appoint a president and a treasurer before any other officers are named. This is for tax purposes and incorporation. After these positions have been filled, your club can begin to choose a vice president, secretary and other officers.

Finally, you should research different online platforms for your investment club. There are a number of platforms specifically designed to support online investment clubs. This could be an an inexpensive and convenient way to operate your club online. Setting up a personalized custom social network for your members is a reasonable option. Whichever platform you choose, make sure that it is well designed and easy for your members to use.

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Alternatively you can join a investor community such as indisy or pro-share, or tradexpert where you can build connections and share views with other investors, but you invest privately.

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