What is an Investment Club?
June 13, 2018
If you’ve ever worked on a team project, you understand the value of collaboration. Whether you’re strategizing on the best way to handle a difficult client or working together to meet a stressful deadline, there’s strength in numbers. Regardless of the project, when a group of people with diverse skills and interests work towards a shared goal, they are often able to achieve greater than if they acted individually.
With people you know and trust by your side, you can feel confident that you’re making informed decisions. That’s the idea behind investment clubs – create a club with the people you’re comfortable with, collaborate on investment decisions, and progress your financial journey as a team. Here’s a simple breakdown of what investment clubs are and how you can get started:
What is An Investment Club?
An investment club is a group of individuals who pool their resources, knowledge, and time together to make investment decisions as a group. Investment clubs are legal partnerships that are founded through a registered broker and established with a set of club rules. Investment club members can collaborate on a trading strategy and split up stock research to create a diversified group portfolio. Each member is an active participant that can propose trades and vote on trades proposed by other members.
Unlike solo investing, investment clubs allow you to make investment decisions as a team. By joining an investment club, you collectively contribute principal payments, build a group portfolio, and share the returns.
Why Should I Start an Investment Club?
1: Investment clubs are cost-effective and accessible
When investing alone, a common constraint faced by new investors is limited capital. A significant benefit of investment clubs therefore is the ability to pool your financial resources. Getting started with investing is something that takes a bit of financial commitment in order to get started. For an entry-level portfolio, it’s common to start with at least $1000, to build a decent mix of stocks. That said, you might not have $1000 lying around to invest with. This is where the beauty of investment clubs come in – when you round up your group of friends, you can all chip in a smaller amount, say $250 across 4 friends, to start investing.
2: Investment Clubs are a great way to learn about the stock market
For those with minimal experience, making investment decisions can be difficult, intimidating, and confusing. When you’re part of an investment club, you have an opportunity to learn from your team members and eventually become a better investor yourself. By all doing research on the same investments, you have the added security that you’re making rational decisions based on the brainbower of multiple people instead of just one. Investment clubs are one of the best ways to pool the diversified knowledge of club members, collaborate on an investing strategy, and share your past experiences in order to reach a collective goal as a team.
3: Investment Clubs get you started sooner
Investment clubs can also help you start investing sooner. If you’re wondering why this is important, read our post about the power of compound interest. When you start an investment club, you can set a per-member amount that’s comfortable for everyone and all pitch in to contribute to that particular initial investment. Going back to the previous example, say you wanted to invest with $1000 initially. Again, if you have 4 friends in your investment club, you only need to save $250 instead of $1000, which is an extremely attractive option for those with tight savings.
How To Start an Investment Club
In the past, starting an investment club was a lengthy and complicated process. It required stacks of paperwork, face-to-face meetings with brokerages, and a considerable time commitment to manage trade proposals collectively.
With the Voleo app, you can register an investment club, collaborate on investment decisions, and make trades in the stock market, all in one place. Voleo handles all the confusing legal processes to save you time and effort. With Voleo, you can easily set up an investment club in under 10 minutes!
Ready to start your investment club? Download the Voleo app now!