“Since the first investment club was founded in 1940,
the number of clubs has grown to more than 23,000. And with
annual returns of up to 12.7%, they sure beat an afternoon
under an umbrella.”
- Lorayne Fiorillo, author of
Financial Fitness in 45 Days
When you join an investment club, which usually ranges from
12 to 16 members, each participant assumes a particular role.
You may be the group leader, buyer, or part of a stock selection
committee. Many clubs give every member the responsibility
of researching a specific stock or an entire market sector
and making a report at each meeting.
The work of investment clubs is similar to mutual funds--you
pool your money with other members and consequently can purchase
more shares than you could by yourself. Only you don’t
hand over the day-to-day portfolio management to a professional
money manager--you and your fellow members are the managers.
Club members are therefore responsible for:
- Researching securities and presenting the data to the
rest of the group.
- Opening a brokerage account.
- Executing trades, either through a broker or online via
the electronic trading system.
- Making ongoing buy and sell decisions.
- Tracking and reporting overall portfolio performance.
- Accurate management and reporting of taxes for each member.
- Maintaining buy and sell confirmation paperwork and other
administrative tasks.
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