Please ensure Javascript is enabled for purposes of website accessibility

Hooray for Investment Clubs

By Motley Fool Staff – Updated Nov 16, 2016 at 2:26PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A dozen heads can often be better than one.

A dozen heads can often be better than one, which is why we love and recommend investment clubs. In investment clubs, folks pool their money, their brains, and their time, and make investments together.

There are gobs of clubs across America, with more than 20,000 alone registered with the National Association of Investors Corp. (NAIC). Clubs typically have 10 to 20 members and meet once a month. Members each contribute about $20 to $75 monthly to a pooled account, research stocks individually or in small groups, present their findings to the group, and vote on investments.

Clubs are ideal for beginning investors, since members can learn together in a comfortable group setting. But even savvy investors can benefit from clubs; they leverage valuable resources such as time. Imagine that you're an experienced investor and you have only enough time to research one company per month -- 12 per year. If you band together with a dozen similar investors and each of you researches and presents a dozen companies per year, you'll each learn about 144 companies, not just 12. That's leverage!

Many folks who go about investing on their own fall prey to un-Foolish ways. They may act on an acquaintance's hot stock tip or try to time the market, jumping in and out of stocks on hunches. Investment club members, meanwhile, are more circumspect. They're usually bound by their partnership agreement to study a stock carefully before voting on whether to invest in it. Clubs tend to own such solid, leading enterprises as ExxonMobil (NYSE:XOM), PepsiCo (NYSE:PEP), General Electric (NYSE:GE), Home Depot (NYSE:HD), and Wal-Mart (NYSE:WMT), hanging on for years, not months or weeks. These kinds of habits can lead to market-beating performances.

Learn a lot more about investment clubs in our Investment Club area. A key club resource is the National Association of Investors Corp. -- check it out.

None

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Walmart Stock Quote
Walmart
WMT
$130.06 (-2.50%) $-3.33
Exxon Mobil Corporation Stock Quote
Exxon Mobil Corporation
XOM
$85.75 (-5.32%) $-4.82
General Electric Company Stock Quote
General Electric Company
GE
$64.55 (-1.24%) $0.81
Pepsico, Inc. Stock Quote
Pepsico, Inc.
PEP
$168.52 (-0.05%) $0.08
The Home Depot, Inc. Stock Quote
The Home Depot, Inc.
HD
$270.94 (0.67%) $1.80

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
339%
 
S&P 500 Returns
109%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.