Launch a Profitable Private Investment Club: A Step-by-Step Guide

Setting up a private investment club can be an easy way to learn about the stock market and other types of investments. In general, private investment clubs are small groups of people who join together to explore investment strategies and make small investments together.

Club Organization
Usually investment clubs are small groups of 10 to 15 people who are joined together in a partnership to learn about and make investments together. Each member pays a regular dues amount – usually small monthly dues of approximately 20 dollars.

Members are expected to contribute to the activities of the club, either by researching or following the progress of specific stocks or groups of stocks that the group has either invested in or is considering as an investment.

Investments
Investments are chosen by the entire group and can range from stock purchases to participation in limited partnership investments to purchase of bonds. In general, investments do not begin to offer any substantial liquid yield until well after the first year of investment, so like almost all investment tools, members should be willing to invest for the long term and not be overly concerned about investing money and seeing an immediate return on their investment or wanting to cash out of the investment club quickly.

Goals
Most private investment clubs have two primary goals – to learn about investing and to ultimately make a profit on their investments.
The first goal is often achieved through the basic work that each member is assigned as they learn to research and follow stocks and various stocks or other investments. With each membership meeting, the information is shared with all of the group members, including the process and methods of research. This way, the entire group benefits from the efforts of each of the members and learns together over time.

The second goal is achieved over time as the group improves their skills at choosing stocks and investments that prove to be profitable. As with most investments, immediate profit is not usually realized – unless the group is lucky and savvy enough to choose the next Apple or Google.

Structure
Usually private investment clubs are set up as partnerships and each member signs the partnership agreement when they join the group. There are organizations like the National Association of Investors Corporation (NAIC) which is a not-for-profit organization devoted to helping small groups of investors form private investment clubs. This particular organization has examples of partnership agreements that are approved for use in all 50 states and even offers clubs membership in the NAIC in order to gain access to the advice and other benefits of their organization (www.better-investing.org). A small membership fee for each club is required, along with a personal membership fee for individual members.

Summary
Private investment clubs are a wonderful way to learn about investing while exploring and trying different types of investments over time. Armed with the knowledge and experience gained in an investment club, members can then begin to make their own personal investments.