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Learn Stock Market Trading Tips
Should
I Try an Investing Club?
For most young people, whether in college
or just starting out, the idea of investing in the stock markets
can be daunting. The process may seem confusing, overwhelming
and something for “real grown-ups.” It is important, however,
for young people to start investing wisely in order to secure
their financial future. One method of familiarizing yourself
with the stock market and its concepts is to join an investment
club.
There
are two main types of investment clubs. The first is
mainly concerned with teaching about investing and the concepts
of the stock market. They use simulations rather than real
money to illustrate the way that the stock market works. You
can learn the principles before you put any of your hard earned
money at risk.
Virtual
investment clubs simulate actual trades and trading
stocks. These virtual clubs are like an investing “school.”
There are several websites available for testing out stock
market principles such as MarketWatch’s Virtual Stock Exchange.
The Virtual Stock Exchange performs market simulations.
Many universities are establishing virtual investment clubs
for the purpose of teaching stock market strategies. It provides
students with a familiarity for financial terms and the financial
institutions available to help them.
Virtual investment clubs can also learn many things beyond
investing to learn about the way the stock market works. Many
clubs host investment relations representatives to make presentations
at their meetings. Brokers are also excellent guests at club
meetings for speaking about how brokerage firms work and networking
with club members.
Other topics to consider for a virtual investment club are
discussing current events and their perceived impact on the
market. Studying the Wall Street Journal and learning to find
and read the stock market pages is another skill acquired in
this type of investment club.
The second
type of investment club is the type that actually
puts forth money into the market. Their purpose is to pool
the money of the group so the members have more leverage in
the market than they would if they had invested individually.
The investment clubs that actually put forth money form a legal
partnership between the members so that each member is protected.
To start a legal investment club, each member fills out partnership
agreements. The documents are available from the National Association
of Investors Corporation (or NAIC), which is a non-profit organization.
Belonging to the NAIC is also recommended because the organization
provides special services. The NAIC charges $40 for the establishment
of the club plus $14 per member, per year. There is NAIC Club
Accounting Software available to keep everything in order for
$159.
The investment club will then open a brokerage account with
a firm of their choice and appoint a treasurer for the club.
The treasurer will maintain and report tax information to each
individual member so all members are well informed of what
is going on with the club’s investment. This also allows each
member to report their share of the club’s earnings and pay
their portion of taxes.
Investing
with a club has several advantages. When you are
part of an investment club, you are able to get different perspectives
on a variety of stocks. Each investment is a group decision
and this allows for a broader input on the stocks that are
invested in. The club benefits from the variety of experiences
and knowledge of the group. Each member gains a broader understanding
of the market by hearing which stocks appeal to certain people.
The investment club also allows investors to spread their money
out over a variety of stocks and therefore, own a portion of
many companies.
On the average, investment clubs have 12 to 16 members with
each person assuming a different role in the club. There needs
to be a president of the investment club to plan and arrange
meetings. The vice-president is responsible for helping to
run the meetings. A secretary is helpful in taking minutes
for the meetings, which helps establish a record for the investment
club. The other members of the club are responsible for researching
and bringing information regarding different stocks. Most clubs
meet once a month to discuss the investments and hear new stock
investing ideas. # # # # # SolveYourProblem.com : 2007
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