Forming an investment club might be a very complex process that's why this instruction provides a comprehensive know-how to a successful investment club. Read through to gain insights:
Form an investment club only with members who share the same investment objectives.
Having members who are long-term investors will take the company higher, but forming with short-term investors can only result in chaos and unnecessary conflict. You can do without either.
There must be a person who is willing to spearhead the initiative almost completely at the initial stage. You may need to take care of venues of initial meetings, food and a bit of secretariat work. Be the leader who they will always lookup. It will pay off for everybody ultimately.
Don't ever start to contribute money until you articulate the vision for the club. Members must agree on where they want the club to be in the next five years, what sort of percentage return they want, what type of business they want to get involved in. Once the vision is in place, investment decisions become easy.
Consider the financial capacity of members you want to bring together to form investment clubs. People usually get excited with the idea initially but when the chips are down, many people are found by the wayside. Members should consider their overall financial commitment in future before belonging to a club.
Don't allow discriminatory contributions from members if you can. Form an investment club where members contribute money on equal basis. Discriminatory contribution is one of the foundations for cracks in the club, as members with the highest contribution want to lord it over others.
Get members to sign the constitution of the club, its business plan and the investment strategy before you start off. This is the only way you can be sure members understand what they are going into. Should arguments come in, you can always flash the written evidence.
Don't waive the rules for any member once you have all accepted and signed them into binding documents. Once you do for a member there will always be a reason to want to do it for others and you can never stop the circle. It can destroy the club faster than you can imagine.
Get someone with accounting knowledge to handle the account of the club. This is an advice you should not joke with. Things can get messier and people are less tolerant when it comes to the issue of money. Once a year get an auditor to look into your book and prepare a standard account. You are a company and you must act so.
