Investment Clubs

Try a Money-free Club

Investment Clubs

If you're really intrigued by the idea of an investment club and are eager to be part of one, but you have some misgivings about tying your money up with that of others, consider a faux club -- a money-free club.

A faux club can operate exactly like a traditional club, except that you leave out all that stuff about monthly contributions, and treasurers and club accounting and taxes. (Sounds good, doesn't it?) These clubs can meet regularly and members can focus solely on learning about investing. They can apply their increased knowledge to their own individual investments at home. Alternatively, this kind of club can attend to education but can also spend time studying companies and presenting evaluations of them to each other. They can also take it a step closer to regular clubs by voting together on stocks to buy and sell, in make-believe-land. This way, they'd have an actual portfolio of pretend investments to monitor and manage. This is a good way to learn the ropes before jumping in, sometimes. (Of course, a traditional club can simply choose to collect its regular monthly contributions from members and accumulate them in the club account until the members have settled on some stocks they want to buy.)

The money-less format has some advantages and disadvantages:

Advantages

  • No monthly contributions.
  • Not much work for a treasurer.
  • No accounts to keep and taxes to pay.
  • Great for people not entirely ready to commit to a regular club.

Disadvantages

  • Sometimes people lose their discipline if they're not bound together in a club by pooled money.
  • Sometimes people take a faux club less seriously.
  • There's no pooled account that grows over the years.
  • It's less fun and exciting for some people, if there's no real money and investments involved.

These kinds of money-less clubs do work -- for some people. We've seen some that have lasted 10 or more years. So consider this option if it appeals to you.