NOTE: This article is only intend for people living in the United States and is not legal or finical advice you should always seek independent legal and financial advice before making any decisions. The below are just my views.
If you are an investment beginner and are looking for ways to invest, increase your investing knowledge or buying power and want to gain some friends along the way, then an investment club could just be the thing to help you get started towards a successful investing future.
Investment club defined
An investment club consists of a group of private investors who pool together their money into a common fund in order to purchase stocks in the form of a group investment. Some investment clubs buy stocks only after they thoroughly studied their prospective company plus of course after they have voted on it.
Each member is given individual responsibilities in the club. Some members are tasked with researching a particular stock while others are given the responsibility of searching for resource persons that can provide them with the additional information that they need. Still other members are given the task of compiling the financial reports of the club. Each task provides members with an opportunity to gain some knowledge on investment.
There are also other advantages derived from belonging to an investment club, take for example the increase in pace in terms of your investment knowledge. Since each member is tasked to perform various functions, gathering of essential investment information is much faster compared to when just one individual is to do the whole job.
There is also much lesser investment risk since a thorough study is conducted before an investment is made thereby increasing the chances of successful investment returns. Plus, the training as well as the knowledge derived by members will help them later on if ever they plan to go solo. Nevertheless, there are some members who still prefer to invest with their co-members since they believe that they make better-informed decisions about stock purchases when there is an absolute participation from the club members.
Likewise, rapport among the members is developed hopefully giving way to friendship. Friendship developed between investment club members makes it even more worthwhile to continue investing and makes the investment process an enjoyable learning experience.
Interesting facts on investment clubs
Most investment clubs are not required to register with the US Securities and Exchange Commission, but its worth checking two federal laws namely the Securities Act of 1933 and the Investment Company Act of 1940. You may also check out some laws of your state under the office of the state securities regulator. The National Association of Investors Corporation is also an excellent resource for the creation and maintaining of investment club.
Lastly, it is not necessary to create an investment club that requires actual purchase of stocks. In fact, an investment club that serves as an educational club for would-be investors can be created and similarly members may also pool their resources for the benefit of learning together while any purchase of stock is left at the discretion of individual club members. The best benefit derived from joining any type of investment club is the learning gained from conducted studies and researches onto what types of investments are feasible and what are not.