Investment club

A group of people who pool their money to make investments. Usually, investment clubs are organized as partnerships and after the members study different investments, the group decides to buy or sell based on a majority vote of the members. Club meetings may be educational and each member may actively participate in investment decisions.

Investopedia Says:
The advantages to investment clubs are that they are the easiest and most economical entities to form, operate and maintain, while the club's income and losses are passed through to its partners and are reported on their individual tax returns. Investment clubs are also a terrific way to learn, make valuable contacts, and meet people interested in the same topics. Some clubs have made fortunes for their members.

Related Links:
These circles of like-minded people are a wonderful way to explore investing without laying out large sums. Investment Clubs Offer Experience And Insight
Your pals may like your returns, but it isn't wise for you to manage their money. Investing For Friends

Group of people who pool their assets in order to make joint investment decisions. Each member of the club contributes a certain amount of capital, with additional money to be invested every month or quarter. Decisions on which stocks or bonds to buy are made by a vote of members. Besides helping each member become more knowledgeable about investing, these clubs allow people with small amounts of money to participate in larger investments, own part of a more diversified portfolio, and pay lower commission rates than would be possible for individual members on their own. The trade group for investment clubs is the National Association of Investors Corporation (NAIC) in Madison Heights, Michigan. The NAIC helps clubs get started and offers several programs, such as the Low-Cost Investment Plan allowing clubs to purchase an initial share of individual stocks at low commissions and reinvest dividends automatically at no charge.

This article does not cite any references or sources. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (June 2008)

Please help improve this article or section by expanding it. Further information might be found on the talk page. (June 2008)

The examples and perspective in this article may not represent a worldwide view of the subject. Please improve this article or discuss the issue on the talk page.

An investment club is a group of individuals who meet on a regular basis for the purpose of investing money.

The invested sums can be as little as $10 a month. The first investment club on record dates back to the 1800s in Western America. Various online communities devoted to this type of investing have recently emerged and have contributed to the personal investing boom in the United States. One of the reasons that people come together in investment clubs is to learn how to invest. While investment clubs are commonly organized with members contributing money and investing as a group in a single club portfolio, members of other self-directed investment clubs simply meet and learn about investing but invest on their own. With the advent of computers and the internet investment clubs have also moved into cyberspace.

Investment clubs are generally formed as general partnerships, but could also be formed as limited liability companies or limited liability partnerships (in states that allow them). While an investment club could incorporate, the double tax treatment on corporate distributions makes the corporate structure less desirable than a partnership. Typically, a general partnership does not generate any tax liability on its own; instead, any tax liability is passed through to members each year.

In the United States Investment club partnerships must file Form 1065 and Schedule K-1s with the IRS each year, and with states that require partnership filings. In the United Kingdom investment clubs and their members are required to submit form 185(new) to HMRC each year. Investment club accounting software can facilitate the management of a club's books and the preparation of tax filings.

Clubs offer the structure and support that many people need to get started investing, and clubs make it possible to get into the market without a big initial investment. The fact that they can accumulate large investment amounts from small individual investments also helps reduce the exposure to risk for individual investors.

See also

• List of finance topics
• National Association of Investors Corporation (also known as NAIC and BetterInvesting)

External links

• Investment clubs and the SEC - A FAQ on investment clubs provided by the SEC
• Jacobs University Investment Club

Further reading

• Investment Clubs for Dummies by Douglas Gerlach and Angele McQuade (ISBN 0-7645-5409-3), published in 2001

This entry is from Wikipedia, the leading user-contributed encyclopedia. It may not have been reviewed by professional editors (see full disclaimer)