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How To Form An Investment Club

By Jason Markum

Investing in the stock market on your own can be a daunting task for most people. Many people are worried that if they make a few wrong decisions they can lose a lifetimes worth of savings and put their retirement in jeopardy. They may not be too far from the truth!

One way that individual investors have found to invest in the stock market without some of the risk is to join an investment club. There really is strength in numbers when it comes to stock market investing and many investment clubs have doubled their money every five years which is something that most major mutual funds can’t boast themselves.

But what happens if there isn’t an investment club near you, or if you’re not confident in the investment club that is in your area? Well one thing you can do is start your own club and that’s what I’m going to talk about in this article today.

Many people believe that the best way to get into investment club type of investing is to do form their own club and I tend to agree. This gives you control that you might not otherwise have if you join somebody else’s club. It allows you to set limits on how many people can join and it may even give you the power over who can join.

It also allows you to set investment criteria and limits if you are worried about potential bad investments. The best number of members for a new club is usually between 10 and 15… sometimes up to 20 if your group has much experience investing.

Your club can meet at your house, or at one of your other members houses, or in a public facility such as a library meeting room or a restaurant or community center. Look for members to join your club from social groups that you already belong to or to business groups that you already belong to, or even from your church. Finding different types of people from different backgrounds can be important because you don’t want a group of people who all have the same experiences and skills.

It’s a good idea to schedule monthly meetings on the same night each month so that every member of the club knows ahead of time when you will be meeting and can plan accordingly.

It’s also a good idea to start out small with your investments. It may take you a while for your group to get up to speed with the stock market and experienced enough to make wise decisions. It’s much better to start out with smaller sums of money, say $25-$50 per member until you are more comfortable and have a proven track record. This way if you stumble at the beginning, you won’t be out a lot of money and expectations won’t drop as quickly.

$25 or $50 may not seem like a lot of money, but if you have 20 members then you’re looking at close to $1000 which is plenty of money to get started for the first few months.

So there you have several tips on how to start your own investment club. It can be a lot of fun and highly profitable if you play your cards right!

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