What are the benefits of joining an investment club? Many investors choose to pool their resources with others in an attempt to make money together. There are several benefits to these arrangements. Here are a few of the main ones.
What is an Investment Club?
Think of an investment club as a group of like-minded individuals who pool their money and resources together. The main goal is to make money. These clubs are sometimes compared to mutual funds where decisions are made by a committee that votes on various investments.
There are no set structures for these clubs, and many are not regulated. However, depending on how the club is set up, it may fall under certain SEC provisions.
Clubs normally meet at regular intervals and review their portfolios. They may take a vote on whether to purchase or sell certain securities or to discuss possible investment opportunities.
Clubs are normally structured as an LLC or some other business entity, and they will usually open a brokerage account in the name of the group.
There are no set rules on the number of members, but many tend to be smaller consisting of 10 to 20 members.
You will normally be required to make a lump sum investment upon joining then be subject to a set monthly fee.
Most clubs will have a mission statement that lays out their overall objectives and goals. For instance, a club may be striving for growth, or income.
Advantages of Membership
The obvious advantage of joining an investment club is that a group of people are pooling their assets into investments that you may not have access to as an individual.
An investment club attempts to mimic the actions of a mutual fund; however, it can avoid the fees that come with mutual fund investing. Individuals choose the investments giving each member full control over the direction of the club. Everyone gets a vote on investments, and everyone has the opportunity to voice their opinions.
These clubs are a great way to learn from others and to network with individuals in your community. Your network is your net worth. Another common saying is that you are the average of the five people who you associate with the most. Surrounding yourself with other financially savvy individuals can help you personally and professionally.
Conclusion
What are the benefits of joining an investment club? Some of the benefits are you will be pooling money with a group of people. This could give you access to investments that you might not be able to invest in as an individual. You can also avoid the fees associated with mutual funds by joining a club. Finally, an investment club can help you network both personally and professionally, as you will be associating with like-minded people who share in your financial goals.
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Based in the Pittsburgh, PA area, Brian holds full-time employment as a Warehouse Manager for an electronics firm. Brian enjoys wealth building, investing, gardening and the great outdoors. Brian holds a B.A. in Environmental Studies from the University of Pittsburgh and an MBA from Robert Morris University.
