One beneficial way to become financially independent is to make informed investment decisions. Whilst some people are good at making the right investment choices, others have a little clue or need some direction to remain on course. Therefore, investment clubs come in handy in such a situation. As such, this article will focus on how to set up and benefit from investment clubs.
What is an investment club?
An investment club is a platform that provides a chance for a group of people to pool their money together. Hence, this money is invested in a wide range of agreed-upon investments that are beneficial to the members of the club. Upon meeting, the investment club members strategize on the criteria to follow in order to guide their overall goal.
For example, they may focus on smaller companies that have the potential to grow fast. Also, they may choose to focus on bigger companies that have a strong dividend record. Most investment clubs require you to pay upfront to invest once you join. After that, there is a specific amount you pay monthly depending on the club’s terms and conditions which will serve as the portfolio investment.
How do you set up an investment club?
Below are several factors to consider if you are interested in setting up a successful investment club.
Choose the club members wisely
Other than to invest, people can make or break the investment club. Choose members who have the commitment it takes to follow through with the process and who share the same vision for growth and progress. Moreover, remember that teamwork wins. Once all the members have an essential role to play in the club and come back as a team, it creates progress and commitment.
Most importantly, choose at least one financial professional among the team to provide financial guidance. As the club holder, you need to be intentional and strategic when selecting the members. Rather than accepting members that will not give value to the club, it is better to reject failure instantly. The goal-oriented and dependable members you choose remind each other of the purpose of the investment club.
Have a mission
Most of the investment clubs depend on the member’s zeal to achieve the goal for the financial objectives. On the contrary, the investment club is more successful if you set the visions and money goals initially. All members have the task to help in deciding on the purposes of the group. As a result, the club flourishes once all the objectives are established from the onset. Some of the goals to discuss are savings plans, mission and vision, duration and dates of meetings, and so forth.
Once you set the financial goals, the next move is to put it into action. With the best action plan for the team, business begins. This strategy is essential because no one can take chances with the investments. Some of the income-generating activities that will be beneficial to the investment club are planning on savings, merry-go-rounds, and investments.
Elect a diligent and trustworthy leader
Choose a leader who can guide the pack, maintain focus, and spearhead the aim of the club. Better yet, select one who has entrepreneurship skills and has experience in business development. With such a leader, the club is more likely to achieve the best financial results that will benefit all the members. Also, such a leader should be ready to be answerable to the members as well as consider challenges and new ideas.
Set rules for the investment club
Rules are essential in every setting where people are involved so as to oversee well-ordered operation and activities. Moreover, these rules govern the disbursement of funds, mode of conduct, and help in making decisions of what and how to invest as a club. To ensure proper adherence to the rules, members and leaders come up with strict fines to put in check those who compromise the rules. Furthermore, the rules keep all members on toes as long as they are reasonable and not too harsh. Harsh rules may result in some new and existing members exiting the club.
Give priority to legal registration, savings, and investments
Saving is a gradual process, and thus, a successful investment club should initially have savings from the member’s contribution. These savings come in handy when there is a need for revenue investment. As much as the process should not be too slow, neither should it be too fast as it might be strenuous for the members and the burden may result in dropping out. Moreover, a legally registered investment club is beneficial to the members as it provides due diligence and protection for the club.
Some local investment clubs started as collective groups for women in some countries such as Kenya and sprung to other sectors. We have witnessed the birth of Savings and Credit Cooperatives (SACCOs), banks, and big companies such as Centum Investments that started as investment clubs. Some African women in the diaspora have set up investment clubs to boost their financial capabilities. A group such as the African Women Investors (AWIVEST) has members from countries such as Tanzania, Kenya, Uganda, Zambia, and Ghana. More so, these women are free to invest their money in ventures of their choice, especially where they are based. An App such as Voleo makes investing fun, profitable and provides a quick and easy means for you to start an investment club with the members.
Final Thoughts on How to Start an Investment Club
An investment club not only provides you with a chance to create wealth but also, you get to socialize and network. Once you follow the above guidelines, you will have a successful investment club. Finally, with the right attitude, members will have fun and become wealthier.