I can tell you right now that if you settle down with your frame of mind now, you will be entering into a relationship that has nothing but pure pain. Whenever a group of people get together for a common purpose, a structure must be put in place, or not much happens. A stock investment club is no different.
For a stock investment club to be successful there are several features that need to be in place for the club to run smoothly. There are two broad types of people in the market, investors, and traders. Investors use the market to build a stock investment portfolio that will realize them a profit in the long term. A trader uses the stock market to make money quickly over a short period of time. Members of a stock investment group should consider themselves to be investors, since they will be in the investment market for the long haul.
Because of the long term nature of the stock investments, a club will need to have clear investment goals. All members of the club should have the same philosophy about investing, and be pursuing the same goals. If these goals aren't made clear, the membership could easily become divided about stock investment decisions, and the effectiveness of the club could suffer. There should be a clear understanding established of what percentage of the profits realized from the investments are going to be distributed and what percent is going to be reinvested immediately back into the stock market.
There should be balance between growth and stability. But before any stock is purchased or sold, it should be required that all members of the investment club be part of the study of these stocks, and be part of the final decision. The club can use technical or fundament analysis of the market to help make these decisions, whichever fits their investment style best.
Because of this fact, it's important that all members of the group attend all the meetings. When there are decisions that need to be made about ongoing investments and future stock investments each member needs to be part of the decision process. If the group decision is held up because some members don't attend regularly, the effectiveness of the stock investment group is jeopardized. Club members should also communicate on a regular basis. Part of the experience of starting a stock investment club is getting together to enjoy similar interests and goals. It's a good idea for all members of the club to have Internet access so that they can keep track of the market from their homes, and to make it easier to communicate with other members frequently.
The importance of good communication between members of the group can't be stressed enough. And last, but certainly not least, there clear records must be kept of all stock investments, profits, losses and any other money issues, that follow accepted accounting guidelines. These records should also be available for any member of the club to read at any time. If all of these guidelines are met, the members will be confident in their club, and feel secure in their stock investments. This will allow the club to grow, and likely produce profits, as well as market experience, to its members.
Without the guidelines, a club will be chaotic and ineffective. And a good way to lose your stock investment.
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