Spread the word. Tell family, friends, and co-workers about your club-in-the-making. Put together a flyer describing what you have in mind, and pass it out, post it on message boards, send it through e-mail, etc.
Define goals. Are people more interested in the club for its educational value, or for the financial returns? Are they interested in short-term or long-term investing? (Most investment clubs use a buy-and-hold strategy. ) Will your members share a general investing philosophy and approach? Determine how much each member can contribute financially. Is this consistent with your goals? Discuss a joining fee. This will be used to pay administrative costs. Make sure potential members know about this up front. [1] X Research source Set minimum monthly contributions. [2] X Research source If people make different contributions, their returns should be proportional. You can either pool your investment funds and invest together (a common practice) or invest through individual accounts (self-directed). Consider starting your club through BetterInvesting. org, an organization that can provide education, support, and online tools and resources for your club. Determine if your club needs to register with the SEC. You can find more information on the U. S. Securities and Exchange Commission at: https://www. sec. gov/investor/pubs/invclub. htm
Fail to pull their own weight (Should the club allow them to stay?) Have only a casual interest in investing and do not participate regularly Fail to show up at meetings or make investments on time Fail to choose and stick with an investing strategy Advocate stock purchases without sufficient research Fail to treat the club as a business Fail to support the creation of interesting and education-based meetings Allow others to do all the work Accept less-than-flawless record-keeping Engage in “finger-pointing” when encountering an unprofitable investment or missed opportunity
Defining and appointing roles within the club (president, secretary, treasurer, investor). What are their responsibilities? The terms should be one or two years, and the treasurer should have an assistant who can move up later. Writing out how the club will manage payouts, divestiture (reducing assets or investments), or dissolution. Laying out the policies on gaining new members and figuring out what happens when a member wants to leave the club.
You should also write a club operating agreement. This would outline all the policies discussed in the previous meeting and should be signed by everyone in the group (as well as others who may join later). There are sample contracts and agreements available online and in books. [4] X Research source To pay taxes, you also have to apply with the IRS for an Employer Identification Number (EIN) and file a “Certificate of Conducting Business as Partners” form with a local jurisdiction (such as a Secretary of State office). Contact your local jurisdiction (city, county, or state) for more information.
You may also wish to provide a list of good, reliable sources for research. In general, you should stick to reputable financial news services and online investing encyclopedias.
Remember to keep some of your initial money uninvested in case the market presents an opportunity.
Review club finances (overall gains or losses, individual investment progress and cash balance available for investment). Give presentations on timely and relevant topics. Discuss and decide how to invest. [6] X Research source Make sure you have designated a single, trustworthy member who has the authority to buy and sell on behalf of the club.
