What is an Investment Club?
There’s nothing mysterious about an investment club. What’s more, you don’t have
to know much, or really anything, about investing, to form or join one. In fact,
the educational aspect ‑- along with making money, of course -- is one of the focal
points of belonging to a club.
An investment club is simply a small group of individuals, usually comprised of
friends, coworkers, church members, neighbors and/or family members, who meet on
a regular basis for the purpose of pooling their funds and investing in a club portfolio.
You might think of an investment club as a miniature mutual fund.
While these clubs are certainly interested in making a profit, members also find
that investment clubs are a great way to learn about investing. Many clubs focus
on education first and even have an Education Committee, where members rotate learning
about a new topic -- like a dividend allocation or PE ratio -- and presenting it
to the club. Clubs that maximize the educational aspects of their meetings usually
find that profits follow.
With an educational component in the forefront, investment clubs can be a great
vehicle for beginning investors. Clubs offer the structure that many people need
to get started investing. They get you into the habit of investing on a regular
basis and they offer the support and encouragement that many people need stay with
it. Clubs also make it possible to get into the stock market without a big initial
investment, which is another incentive for new investors.