If you want to start investing but don't have a lot of money or a lot of knowledge about what it takes to make successful trades, you might want to start an investment club. A good way to start trading on the stock market and limit your risk is to join an investment club.
When you start an investment club, you will not have to take on all the risk by yourself. Instead, you will share it with the other members. This also means that you will have to pay less money up front, so if the club makes a bad trade, you won't lose as much money as you would if you were investing on your own.
One of the first things you need to do to start an investment club is to find people who want to join. Start by asking your friends and family if they would like to join your investment club. Before you start, though, be careful about who you ask to invest with you. Only ask people you know you can trust and get along with well. People who are interested in the stock market and have a little bit of money they can put into the club every month will be your best candidates.
After you have chosen the people who will join the investment club, you will need to make sure that everyone has the same goals. Some people will be more focused and serious about the club, while others may try to see it as an opportunity to meet new people or learn something. Find out what everyone thinks about the goals of the investment club and write down the goals that are suggested. Once everyone agrees on a goal, it's time to talk about how much money needs to be paid each month.
Once you've worked out the membership issue and agreed on and written down a clear goal, it's time to decide how much money each member will have to pay each month. You need to make sure that the agreed-upon monthly investment amount is big enough to buy stock but still affordable for everyone.
Depending on the size of the investment club, you could make the decision in $25 amount increments. Each person would agree to pay their share of the monthly money on time on a set date. Larger clubs with more than 10 people can lower their dues and still trade well. People have said that $50 should be the number for groups with ten members or less. No matter what you decide, make sure that everyone can afford to put this money forward without getting hurt.
After you've taken care of all of these things, it's time to make an Operating Agreement that says how the club will run. When you open a club bank account, the bank will ask for your club's incorporation papers or partnership agreement.
Setting up your own investment club can be very rewarding in ways other than the money you might make. It also helps you learn how a business works and how the stock market works.
