What are Investment Clubs?

Investment clubs have been around for a long time. They are generally groups made up of likeminded individuals looking to pool their money or ideas and invest in a variety of investment vehicle. Each investment club is operated in its own way and has its own rules. It is like a small business run by a group of people who generally vote on their investment decisions. An investment club could be just what you need to start or further grow in your investment journey.

The SEC defines an investment club as “a group of people who pool their money to invest together. Club members generally study different investments and then make investment decisions together – for example, the group might buy or sell based on a member vote. Club meetings may be educational and each member may actively help make investment decisions.” The SEC does not regulate investment clubs. However, if a club begins to function more like a mutual fund, they will treat them as such under either the Securities Act of 1933 or the Investment Company Act of 1940.

There are other ways that you can invest in an investment club. Some clubs act more like discussion forums for experts or beginners to learn more tricks to their trade. It can also be a place where investors join together and begin partnerships together. It can even be a place where like-minded investors can put their money into other people’s investments or projects.

Investment clubs are great places for investors at any level to pool together their funds and invest in a variety of investments that they may not necessarily invest in on their own. It spreads out the risk between the pool of investors – this means that when you lose, it doesn’t hurt a bad. Plus, you still get to participate in all of the investments that go well.

So, what are you waiting for? Grab some like-minded investors and start a club. You can do this with friends, family, colleagues, or even people you don’t know all that well. The point is to pool together money and experience to ensure that you are making the best investment decision – all while spreading out your risk. If you would like to learn how to start an investment club, check out CollegeInvestor.com. Also, if you would like to learn more about investment clubs themselves, check out “Starting and Running a Profitable Investment Club: The Official Guide from the National Association of Investment Clubs” by Ken Janke and Thomas E. O’Hara.