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Finding an Invesment Club

One of the major obstacles many investors face when they set off on the investment club path is finding a club to join. Unfortunately, there is no easy solution to this problem. Here's why:

The U.S. Securities and Exchange Commission looks askance at "unregistered securities" that publicly advertise for investors. Since clubs are not required to register as securities with the SEC (as long as they operate within certain parameters), they are prohibited from publicly soliciting for new members. Such an advertisement could potentially be seen as a "public offering of a security," and that gets too close to SEC-regulated territory. The SEC proscribes how a company or individual can advertise a security to the general public. As a result, you'll seldom see investment clubs actively and publicly soliciting new members. (This doesn't mean you can't tell people about your club or ask them to be members, but it's probably not a good idea to take out an ad in your local newspaper promising big returns if people join your club.)

In addition, most investment clubs are private affairs, made up of people with a natural affinity. A club's members may attend the same church or social organization, be part of a family or neighborhood, or have some other thread that ties them together. Many clubs don't actively seek members who aren't already part of their social network.

But here are some tips to find a club to join:

1) Post a message in our Clubhouse Forum message boards at stockcentral.com and ask fellow readers if they know of any clubs in your area.

2) Form your own club. A successful club can operate with as few as five or six members. Don't get hung up trying to find a large group -- a smaller group of interested people can build a viable, long-standing club.

3) Consider forming (or joining) an online club. The same problems may arise with finding an online club as with an "in-person" club, but there are dozens of online clubs with websites that describe their approach to investing.

Above all, don't give up. Investment clubs are a great way to learn about investing, and can be a fun and profitable way to get involved in the stock market.

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