| There are a few general and commonsense rules to | | | | undue concerns. Concentrate on starting with people |
| follow to ensure a successful start and outcome for | | | | you know and trust and create a group that can get |
| a new Investment Club. Usually a club will start with a | | | | together and have fun, and you will see that your |
| group of friends and family and it is important to | | | | club will be a huge success, with lots of learning and |
| outline to all members what is involved and what the | | | | lots of enjoyment. |
| club guidelines are and to ensure that all members | | | | Finding the perfect members for an Investment Club |
| participate in the creation of the club structure and | | | | - |
| have input to decisions. | | | | After the decision to start an Investment Club, the |
| One of the biggest mistakes that a lot of new club | | | | next step is to get together a cohesive group of |
| founders make is that they do not tell the club | | | | people as members. Without members, there is no |
| members upfront that they may lose money with | | | | club! It is beneficial if the members know each other, |
| the trades that they make in the beginning. Not | | | | and it is also important to have a group of people |
| every trade that the club will make will be a winner, | | | | who get along with one another. |
| and this is especially true during the first few months | | | | People who are going to fuss and argue every time |
| of the club. Since many of the investment clubs | | | | you hold a club meeting will be best avoided. By |
| which are created do not have many members who | | | | picking wisely, you will have club members who can |
| are familiar with making stock trades, it is a learning | | | | agree easily with one another which is a crucial |
| process for the majority of the club members. It is | | | | element in a successful club. |
| essential to inform potentialmembers before they join | | | | When a club is just beginning, it is an option to |
| that the money they put up for investment should | | | | advertise for members if necessary, but once the |
| be money that they can stand to lose, and not | | | | club has actually been formed, then to add new |
| suffer any hardship because of the loss. This being a | | | | members later would be done by member referrals |
| general rule for all investment with any risk. | | | | only. It is also possible to find initial members online by |
| In discussing money, it is necessary to make sure | | | | going to certain investment web sites which allow |
| everyone agrees upon what the contribution will be | | | | youto post messages stating that you are interested |
| for each member on a monthly basis. The amount of | | | | in starting an investment club. |
| the monthly contribution should not be more than | | | | Also, when starting a group, an important criteria is |
| what any one member can afford to put in monthly. | | | | to you recruit members with similar financial goals so |
| If all of your members but one can afford to put | | | | that the group unity is not threatened by arguments |
| $100 into the club account, and the one can only put | | | | later about the direction in which the group needs to |
| $75 into the club account monthly, then everyone | | | | go. It is wise to get members who all can agree on a |
| should only put $75 into the club account. Then all | | | | certain amount to be invested on a monthly basis. |
| members are on an equal footing. All monthly | | | | Since all profits will be split equally, it is only fair that |
| contributions must be equal to sustain the equality of | | | | everyone contribute the exact same amount of |
| the group and its integrity. The most common | | | | investment cash every month. |
| monthly contribution amount used for investment | | | | The members chosen to recruit should be easily able |
| groups is $20 per month, but each group decides the | | | | to contribute the agreed upon monthly contribution. |
| parameters for the club. | | | | They should also be able to do their part of the |
| Make the club official by drawing up a partnership | | | | research which is required in being a member of an |
| agreement and have everyone who wants to be a | | | | investment club. Arguments will ensue if any |
| member of the club sign the agreement. It is crucial | | | | members are not pulling their weight doing the |
| to the success of the club for everyone to know | | | | research or making the monthly contribution. |
| what is expected of each individual, and the group as | | | | Some people choose not to use family or friends |
| a whole. By having a signed membership agreement | | | | when starting their investment group. This is because |
| and a copy given to each member, potential | | | | they do not want to mix their money with their |
| disagreements can be largely avoided. | | | | family relationships and friendships. If there is doubt |
| Do not try to start with a large investment group. | | | | about getting along with family members or close |
| Having too many members can cause many | | | | friends when it comes to dealing in money matters, |
| problems, such as a greater risk for arguments and | | | | then it may be a better option to not include them in |
| fragmentation of the group. For the group to work | | | | the investment club. |
| as a team, requires a team of a manageable level of | | | | Once the members and the agreement are |
| no more than fifteen. Most investment clubs do not | | | | organised, it is essential to start setting the goals for |
| exceed 10 members. | | | | the group. The investment club will be ready to start |
| Starting your own investment club should not be | | | | market research and create reports of promising |
| something which makes you nervous or causes | | | | companies to consider for investment. |