As someone new to investing, the entire process can seem complicated and impossible. One way to overcome the fear of getting started is to join an investment club. Not only does a club expand your investment opportunities by pooling the resources of all the members, it also provides a social structure that offers education, support and a great resource of information for the novice investor. An investment club can be a great way to learn about investing while making new acquaintances and having fun. Members are much more relaxed with the whole process and enjoy the feeling of security that comes form investing as a group.
Simply defined, an investment club is a group of like minded individuals who want to combine their resources into one large investment as opposed to the smaller singular investments that they would be able to make on their own. The members form a partnership that is registered and governed by the certifying bodies that regulate such organizations. Members decide together as a whole which investments to make. Risks are studied and analysed and the overall objective is to make money, most members of the club are beginners and the expectations are usually quite conservative. Most club members are looking for investments that will grow over time, not overnight make it big schemes.
If you think that joining an investment club may be the right way for you to get your foot in the door, here are a few things to consider before joining.
Make sure that you understand the workings of any specific club and are comfortable with the way it is being operated. Sit in as a visitor for a meeting and get a feel for things. Make sure it is an atmosphere you are comfortable with.
Be certain that you understand your own investment goals before you join a club. If you’re not a risk taker by nature, investing even small amounts of your hard earned money can be difficult and stressful.
Be honest with yourself regarding your expectations. Most investments take a long time to give you a good return.
Accept that you have a lot to learn. No one in the club will expect you to be an expert or to know everything.
Plan ahead for how much money you want to invest and stick to your plan. The great thing about an investment club is that even a small amount of money can be invested, and in fact, most people in the club will also be investing small amounts as well.
Keep in mind that your opinions and interests will only be one voice in the whole group. Final decisions on investments may not be exactly what you would choose. If the ability to sit back and accept a decision that may be different from your own is difficult for you, an investment club may not be a good fit.
Realize that making money from your investment is never a guaranteed thing. If you never make a single penny, just have fun and enjoy the learning experience.
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