Start Your Own Investment Clubs

Start Your Own Investment Clubs

Collar your co-workers & start your own

By now, everyone has heard doing with their Office Equipment about workplace lottery winners who’ve gotten rich together. For example, all it took was $10 apiece for the group of machine-shop workers from Ohio to purchase 130 tickets at a local gas station to become winners of the largest Powerball jackpot ever — $165 million. Though the Lucky 13 may have struck it rich over night, they still were betting on “one in 85 million odds.” There is a more practical way for you and your colleagues to come together to accumulate wealth — by starting an investment club.

Investment clubs are formed by people who pool their money to invest in stocks, bonds, mutual funds and other investments. The appeal is simple: A club has the funds to diversify its investments better than an individual could do on his or her own. Learning to use money wisely is the common thread connecting more than 24,000 clubs in the United States with 500,000 members and combined assets over $60 billion. One of the benefits of forming your own club is that you start the learning curve the same time as everyone else.

Many clubs are formed by people who work together. Others are formed by family, friends, church members, teammates in sports leagues and other ready-made social groups. Forming a club with co-workers is a lot easier in some ways. “The biggest complaint among club members is finding a convenient time and place to meet each month — people often come up with a lot of excuses at the last minute as to why they can’t meet — they have to pick up the kids or go out of town,” says Simone A. Thompson, investment representative for Edward Jones, a New York-based brokerage firm. “You can catch up with the people you work with — you see them all of the time. You know their schedule. You can talk about club news over the watercooler.”

If you are interested in starting a club, talk to co-workers whom you are friendly and socialize with already — whether you eat lunch together or go shopping after work. It’s OK to include staff members and managers. But most importantly, members should enjoy each other’s company. Belonging to a club will put a further strain on the working relationship of colleagues who don’t get along. It may even be a good idea to pass up your tyrannical boss for membership.

First step, send out a memo or email asking select members to come to an introductory meeting. During that first meeting, discuss monthly dues. How much can people afford? Second, give members a profile personality test to see where everyone stands. Are they risk takers or conservative investors? Are they looking for a get-rich-quick scheme or to invest for the long term? Club members should be compatible when it comes to investment goals.

Keep in mind, people are going to bring their same poor work habits to the club. So make sure you recruit people who are truly committed, which means meeting once a month and sharing the workload when it comes to researching companies, picking stocks and reviewing the club’s portfolio. If everyone does his or her part, interest will remain high and the club will stay alive.

As with any group activity, there will always be disagreements. And there is bound to be someone who believes he or she is getting shortchanged or is convinced that others are not carrying their weight. It’s common for members to get impatient and to jump ship shortly after the club’s formation. Or a personal or financial crisis arises and member participation tends to drag.

Finally, once you have hammered out the goals and operation of the proposed club, ask for a show of hands by those who feel they would like to continue with the organization of an investment club. If a sufficient number — around 10 — are still interested, then you are ready to forge ahead.