Investing in the stock market can be stressful. After all, you're risking your hard earned money in an attempt to make more money. There's no guarantee you won't lose it all. You may also make a killing, and that's what makes people take the chance. If you know next to nothing about the stock market but would like to get your feet wet, you may want to consider starting an investment club. It's a way to gain some experience without having to make all the decisions yourself. Following are a few tips on how to start and sustain a successful investment club.
What Is an Investment Club?
An investment club is where a group of people get together and pool their money to buy and sell stocks and bonds or pursue other investment opportunities. One of the advantages is that an individual will be able to benefit from the knowledge of others, while offering their own in return. You pool not only your money, but your knowledge and experience as well.
How to Start an Investment Club
If you're interested in starting an investment club, you must first decide whether you're getting into it simply to make money, or for the learning experience, or some combination of the two. Since this is an activity that will require not only money, but time, too, you should make sure you're willing to make the commitment. The first step is to research the concept of investment clubs. Use all the resources you have available to you, including the Internet and your own contacts.
Check out a group called the National Association of Investors Corporation (NAIC.) They have a track record of helping investment clubs become successful long-term investors, and could certainly be helpful to you. Talk to friends, relatives, coworkers, and other people you know who are interested in the stock market. Find out if they have any interest in joining an investment club or if they know anyone who does.
Your club will have a much better chance of success if you seek out like-minded people--those who have the same, or similar, goals. If one person wants to jump in with both feet and invest thousands of dollars immediately, they may not get along with someone else who merely wants to take a chance by investing a few hundred. The more you know about the people who are involved, the better the odds of your club becoming successful and staying that way.
If your group is too large or too small it can become a problem. Having too many people may make it difficult to come to a decision on what stocks or bonds to buy or when to sell. If you have too few people you won't be able to take full advantage of the greatest benefit of an investment club, namely feeding off the experience and knowledge of others. The perfect number is something only your club can decide, but a group of 12 to 15 seems to work well.
Before any money changes hands, you should organize the club. Elect officers just as you would with any organization. Determine what your goals are, then brainstorm ideas on how to attain them. This is where your group's ability to get along will be tested, and the reason you need to have people who want similar things. Another important factor is to agree not only on where you're going, but the method of getting there.
Long-Term or Short-Term Investing
This is one of the most important points your group must agree on before the actual buying and selling begins. You must all be of the same mind. Whether your group wants to make quick in-and-out investments, or is determined to stick it out for a long period of time, every member of the group should agree. Those who are determined to make a swift profit and then get out will definitely not get along with someone who wants to be more conservative with their money and is willing to wait long periods of time for their investments to pay off.
About the Guest Author
This guest post is from Bailey Harris. If you are interested in writing a guest post, please contact PF Stock at the Email address listed in the sidebar.
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