Investing for Fun, Education, and Profit.
Are you a lone wolf investor,
or would you rather run with the pack in an investment club?
It was a sunny spring day many
years ago when a coworker came into my office with a clipping from the
New York Times. "Look at this article about investment clubs," she said. "We should start an investment club!"
I didn't have the foggiest
notion of what an investment club was, and I didn't even know anyone
who was investing in the stock market, besides in mutual funds in the
company retirement plan. But I've always been a believer of the "learning
by doing" approach, so it seemed natural to try to learn to invest
while actually building a portfolio of stocks!
In the mean time, we began
to talk to a select group of people in our office, to our friends, and
to family members, to see who might be interested in joining our club.
We organized a planning meeting at my apartment, and about 15 people
said they would come.
The material provided in our
Club Hub Learning Center outlined the steps we needed to take to start
our club, from creating a partnership agreement and bylaws, to opening
a bank and/or brokerage account, to electing officers, to developing
a method to evaluate investments for our portfolio. We set our initial
monthly dues at $20 per member (but allowing members to contribute more
if they like), making it easy for just about anyone to be a member of
our club if they had the interest. We followed the guidelines provided
here, and in about three months we had formally established our club,
the Blue Chip Posse, with 15 members. Our members included an architect,
a theater manager, a computer analyst, an accountant, and an attorney
-- men and women of all ages, occupations, races, and religions!
Our first task was education.
Since we didn't have a clue about how to invest in the stock market,
we spent our first several months teaching ourselves. Our Vice-President
was in charge of education, so each month he presented a lesson about
investing. You can learn all about investing, and gather insights
from experts at stockcentral.com. In about six months, we
were ready to buy our first stocks, and we purchased two stocks in dividend
reinvestment plans (DRIPs) and one stock in our newly established brokerage
account. We figured that if we were really committed to learning by
doing, we shouldn't further delay buying our first stocks.
From that beginning, our club
has built a portfolio that's worth about $35,000. We've had members
come and go, but it's been exciting to see how all our members have
learned from the experience of being in a club. Members are investing
in their own brokerage accounts, making better decisions about their
401(k) plans, and getting their kids started in the stock market --
all because of what they've learned from being a member of the club.
When you're a member of an
investment club, you're paying yourself first, since you must
make your club dues each month. You're investing in the stock market
for the long-term, reinvesting all your returns and letting your portfolio
grow by compounding. By investing consistently in your club, you're
taking advantage of the principles of dollar cost averaging, buying
into the stock market whether it's high or low.
For the members of the Blue
Chip Posse, building a portfolio of quality, long-term growth stocks
has been a sensible part of our overall financial plan. But it's also
been a fun and educational experience -- something you won't get from
too many other investments!