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Investment Clubs

How Do I Start A Club?

Since we've done such a great job convincing you of the merits of joining an Investment Club, you're now itching to run out and form your club, or maybe you're just curious on how they run. Below, we outline a number of simple steps that will help you on your quest.

Find a Group

This step tends to be quite important. Without it, you usually end up alone, in a large room, talking to empty chairs. So, to avoid this unfortunate set of circumstances, round up your friends, neighbors, fellow co-workers, or even family members. A group of 8 - 15 members is usually recommended, however, clubs both smaller and larger in number have also been highly successful in the past. Try to find a mix that can get along reasonably well. Remember, you will have to interact with your club members at least once a month.

Establish Goals

Once you have gathered together your team of "investment superstars", you should establish a clear set of realistic goals. This can be done at the club's first formal meeting. Often, two or three primary goals are submitted by each member, with the most popular going to a democratic vote to determine the order of priority. Two important goals adopted by most clubs, which we alluded to earlier are: to learn about investing and to earn a solid return on their investments. The primary goals are then set and group members should understand these stated goals. Remind all members that the club is designed to be a long-term commitment, so the decision should not be taken lightly.

Formal Structure

The structure is usually quite simple and can be modified in several ways to meet your specific needs. Most clubs of 8 - 15 people are usually set up as a legal partnership for taxation purposes. During your first meeting, you will probably want to perform the following:

  • Elect Office Holders

    Most Investment Clubs elect a president and vice-president as well as a treasury officer to keep track of the transactions. If there appears to be no one inclined or capable of the treasury position, many clubs hire a qualified accountant to look after the books (a good choice).

  • Draft a Meeting Schedule

    Most Investment clubs meet once a month, yet this is only a guide line. It is important, however, that you schedule a year-end assessment meeting in which all members should attend. Here, the club should closely monitor whether or not it is achieving its stated goals. If it is not, then modifications should be discussed at this time.

  • Open Bank and Brokerage Accounts

    Shop around; agree on a bank that is suitable for your club's needs. Most of the larger banks in Canada and the US also have brokerage (discount and full service) services. For administrative and simplicity purposes, it is often a good choice to do your trading with a brokerage owned by your club's bank.

  • Set Monthly Contribution Level (if necessary)

    Many Investment Clubs are set up under the assumption that each member will contribute a certain minimum amount ($20 - $40) each month. This allows almost anyone the opportunity to join. Of course, members are always welcome to contribute more. Indeed, many clubs are set up with an initial lump sum contribution from each member and yearly or semi-yearly contributions thereafter. The key is to find and define a workable structure that all members are comfortable with.

  1. Introduction
  2. Why Should I Join?
  3. How Do I Start a Club?
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