What Is an Investment Club?
An investment club comprises a group of people who pool their money to make investments. Usually, investment clubs are organized as partnerships and after the members study different investments, the group decides to buy or sell based on a majority vote of the members. Club meetings may be educational and each member may actively participate in investment decisions.
How Investment Clubs Work
The advantages to investment clubs are that they are the easiest and most economical entities to form, operate and maintain, while the club’s income and losses are passed through to its partners and are reported on their individual tax returns. Investment clubs are also a terrific way to learn, make valuable contacts, and meet people interested in the same topics. Some clubs have made fortunes for their members. Investment clubs may be created by amateurs or professionals, and may invest or specialize in a variety of assets, or provide funding as incubators
How to Start a Club.
When setting up an investment club the following steps are recommended:
Organize membership: Be sure to find candidates that want to actively participate. Consider utilizing an entry fee and a monthly membership fee to weed out the unengaged. Members should be trustworthy, open to performing research and able to afford such activity.
Choose an organizational structure: Who will lead the club and how will they be selected and succeeded? How often will it meet? What are its rules? How will records be kept?
Choose a legal structure: The most common structure is a partnership. This is important because a brokerage account cannot be opened without a legal structure.
Decide on goals and objectives, and create an operational plan on how to achieve them. This should be a group effort to build a consensus.
ASW Consults has been very successful at orchestrating the start up of two successful investment clubs that’s to say Plus Save Investment Group and Gold Crest Investment Group.