By pooling your investment you will have more protection when your investment depreciates and you stand to gain more when it appreciates.
One of the secrets of pooled investment is that you will also gain a significant amount of knowledge. This will help to steer you on your way to success.
Most clubs are less than three years old, and that nine out of ten have a portfolio valued at less than $10,000.
No concerted organizational or promotional effort One of the astonishing developments in stock ownership in the past 10 years has been the wildfire spread of investment clubs throughout the nation.
A New York Stock Exchange survey indicates that there are at least 20,000 clubs in existence, with a total membership of more than 277,000 people—and that more are forming, at a phenomenal rate, every day. The market value of the clubs’ holdings tops $160 million and they are pouring $2 million of new investment into the market each month.
All this is the more remarkable when it is considered has created these clubs. They have sprung up spontaneously as the realization has spread that here is a device enabling people of modest means to educate themselves about investment and to acquire stock in an orderly, consistent, and intelligent manner.
In outline, a club’s members meet regularly, contribute funds equally, study investment possibilities carefully, and agree jointly on shares to be purchased or sold. The unique features of this procedure are, first, that by responsible group effort the members can learn the complexities of investment and, second, that by aggregating funds they can acquire stock with individual contributions even smaller than the Monthly Investment Plan minimum.
Most clubs are composed of neighbourhood friends or business associates. Sometimes they are employees of the same firm, sometimes members of a fraternal or religious group. The majority of clubs have all-male memberships, although some 3,800 include women, and something over 2,000 are exclusively for the ladies.
A group of policemen form the New York’s Finest Investment Club. A group of Maine business¬men, who have been long-time hunting companions, are now stalking profits as the Katahdin Investors Club. Some avid bridge players have become the Bridge Investors Club; the Johns-Manville Club is made up of J-M employees. Essentially, these alignments assure a pleasant social atmosphere and economic compatibility, so that everyone can contribute equally to the club’s program without strain.
The average club membership is 15, a few number 20. Many clubs start with six or eight, and grow as interest is aroused. Experience indicates that 12 to 15 members are best able to conduct the business of the club. Beyond that number, things get somewhat bulky and unmanageable.
It can be extremely helpful to have a lawyer, accountant, and/or banker among the members. This is not always possible, and many clubs are operating successfully without them, but if they are not members, they should be within hailing distance to give professional advice on legal and tax matters, where necessary.
Clubs should also establish an account with a brokerage and get to know the customer’s representative who is handling it. He can be a source of much useful information on the new and unfamiliar field the club is entering.
Many brokerage houses are happy to have representatives attend occasional club meetings to explain brokerage and market operations, security analysis, and economic trends.
With membership established, the club’s next step is to agree on objectives and procedures: How often shall it meet? How much shall each member contribute? How should stocks be selected? What should be done with dividends?
Clubs ordinarily meet once a month. Meeting less frequently than that slows activity to an unsatisfactory pace, more frequently places a greater demand on the members’ time than the funds involved warrant.
The usual investment is $10 per person per month, although this depends entirely on the group’s level of income. Some clubs set the ante as high as $100 per month. Less than $10, of course, does not give the club much capital to work with, and will probably make progress seem discouragingly slow. More than $40 makes it possible for a member to set up an individual MIP, and at $100 an investor could deal directly with a broker from time to time. In these latter instances, however, diversification would be harder to achieve and, of course, the burden of stock selection would be on the individual rather than decided by the shared wisdom of the group. It appears that most individuals find the club experience a good training ground in investment and that, after they learn their way around, some 40 per cent of them feel well enough oriented to open personal accounts.
Investments of $10 to $20 a month for groups of 10 to 15 people mean a fund of from $100 to $300, not an overwhelming amount, but enough to buy 10-share blocks at 30 or 5-share units at 60. The average club investment is about $260 a month.
Whatever the amount, most clubs feel that it is absolutely essential that all members invest equally. If individuals are allowed to have two or more memberships, or to invest twice or three times as much as the others, it will also be necessary to give them two or three votes in club affairs, thus unbalancing the share-and-share-alike mutuality which is basic to successful operation of this kind of organization. Twice as much money is not automatically a guarantee of twice as much good sense when the votes on investment are cast.
In selecting stocks for investment, procedures are as various as the ingenuity of the club permits. Some clubs start by accumulating shares of the company the members work for, or a company active in the area whose personnel and operations are known to the club.
Other clubs undertake a study of a different industry each month and then, perhaps, appoint a committee of several members to report on companies within the industry. Some clubs arrange visits to company headquarters, or branches, in their vicinity. They inspect oil fields, mines, mills, and manufacturing facilities. All of this, of course, is rudimentary, but it is the beginning of understanding and evaluation.
For the rest, it depends on the club’s objectives. Like you, it must decide whether to try for growth, dividends, or stability, whether it is in for a quick profit or for long term appreciation.
There are some Forex investment clubs that you can join by searching the internet that help to pool investors money.
It is well worth using Forex software to help you perform well when you trade on the Forex.