Page 39 - Equity Movement Magazine-Issue2

INVESTMENT CLUB RESOURCE
Investment Clubs Tips
James Jerome Bell
nvestment Clubs are gaining popularity from the
concept that there is power in numbers. Groups
Icoming together with small amounts of money and
leveraging their monies buying power in stocks and
bonds.
Pooling monies together creates
an opportunity to invest when
you normally couldn’t buy on
your own.
Small amounts of money gets
you in the game, therefore, take
advantage of opportunities
because it just may be the
winning ticket that you need.
Tips to Consider
1. Join or Create a group of
interested people. Discuss the goals and expectations,
making sure they're compatible. Don't actually form the
club until you're sure you're all committed to it.
2. Agree on the amount of the monthly contribution per
person. Choose a name for your club, elect officers, and
file for a Tax Identification Number via IRS Form SS-4
(which you can download directly from the IRS website).
3. Draft a partnership agreement and bylaws. Open a
brokerage account. (Alternatively, you might create a
less-formal club, which learns and researches together
but stops short of investing actual money together.)
4. If learning about investing is one of your club's goals,
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you might elect an education officer to organize lessons
for the group. Members can each read a book or article
on investing or business and then report back to the
group. One member might learn how to calculate some
stock valuation ratios and then teach fellow club
members. You can all go on a field trip to a local
company or stock exchange. Or
visit a local library together and
ask the librarian to show you
some useful reference materials,
such as Value Line stock reports.
Consider inviting some guest
speakers as well, such as a
veteran investor, a member of a
more-experienced investment
club, or someone who works in
an industry you're thinking of
investing in. These activities help
keep interest high among
members.
5. Research stocks, studying companies' financial
statements, competitive positioning, and business
strategy. Just about all the information you need to
evaluate a company is available online. Being able to
take care of some business online between meetings can
help make your face-to-face time more productive.
6. There are a few perils you'll want to avoid:
Ÿ Don't under-delegate. Each member should be an
active participant.
Ÿ Don't be impatient. Focus on long-term rewards.
Ÿ Don't be "all business." Have fun, offer
refreshments, and socialize -- perhaps even with
another local club.