What is Investment club?
Investment club is a group of investors who bring together their money in to a common pool and trade stocks. This is just like mutual funds, but not mutual funds. They are just making a group investment and a few such clubs invest in stock, only after making a detailed study of the stock and sometimes they make votes among the members of the club to invest in a particular stock.
This is not like mutual funds because here each member of this investment club has special responsibilities as their ability and experience. Some of them make necessary researches and some others have to find suitable person who can give ideal information about a specific financial product. Each member has his own role to do and this investors club is a joint venture to make most profit out of their hard-earned money. When take part in each role the member get experienced in that process and in future he or she can become an experienced investor.
The main advantage of investment club is that since it is a group work and each member has their own role to investigate about each investment they can acquire more related knowledge easily than an individual can do all the work himself. They can get all essential investment information quickly and they can act soon before others do the same investment and can make a good result from the investment.
They can cut the risk of investment in a particular financial instrument because they are investing only after a thorough study about the investment. The knowledge they acquired also helpful for them if they wish to go for personal investment. But most such investors are wishing to go with this investment club so that they are getting much protection in their investment when they are in the group.
The friendship and co-operation in an investment club is an asset and they can enjoy their investment and relationship with all other investment club members and it is worthy for their future life.
Some interesting facts about investment clubs
Investment club is not required to register with US Securities and Exchange Commission. But, they have to see the federal laws such as Securities Act of 1993 and Investment Company Act of 1940 and some state laws also where they are functioning. They can get all resources about introduction and functioning of an investment club from The National Association of Investors Corporation.
An investment club is not required for buying and selling of stock. But when we buy through an investment club it is the fruit of a collective work and research and one can make more profit out of his hard-earned money and can acquire more knowledge about the process of investment. He can find more profitable investment with the collective study. So an investment club is useful for beginners in investment.