Building Wealth Through Investment Club

One of the options on the rise to enter the stock market is to set up an investment club. These

clubs are made up of amateur investors who want to operate on the stock market with small

capital. Retirees, students, university students or housewives have made their first steps in the

stock market resorting to this option. Clubs are more interesting at times like the current one,

where uncertainty and stock market instability predominate.

The investment clubs are a true initiation school for many savers who do not dare to enter the

market alone. Its members will share a portfolio of values, chosen among all and financed with

common capital. In the distribution of the profits, each member receives an amount proportional

to the contribution of each member to the patrimony of the club, which does not have to be

identical.

The first requirement is that its members share their passion for the stock market and their desire

to learn the ins and outs of the market. It is not necessary, far from it, to be an expert in the

equity market. In fact, one of its objectives is to promote the financial formation of the people

that compose it. To form an investment club, you only need to raise a small capital and get in

touch with a few friends willing to learn.

The clubs operate with their own assets, legally configured as a community of goods. This must

be included in the partnership or operating agreement that must be drawn up by club members. It

will contain your personal information (names, surnames), your participation fee in the capital

and other aspects such as the name of the club, its purpose and registered office. This act must be

signed by each of the partners.

In addition, club members must draft statutes, which will be the provisions, covenants or clauses

by which the club will be governed. They must include the name of the financial intermediary

that will mediate in the purchase and sale of securities, that is, a company or securities agency,

which will buy and sell on behalf of the club. Keep in mind that only these intermediaries are

authorized to execute the purchase-sale of shares.

To establish the clubs, they must have at least five members, but it is not recommended that they

exceed 20 members. Regarding the contributions, both those made at the beginning and the

additional ones should be limited in the agreement. Once the club is established, its members can

begin to carry out the first investment operations. In principle, the clubs invest in shares,

although also, according to their specialization and knowledge, they can operate in other more

complex financial products, such as derivatives.

The goal is to build gradually a portfolio of securities that can be modified as often as desired.

Actually, the club function as a small investment fund. To decide on what values to invest, club

members should meet periodically to discuss the situation of the most interesting exchanges,

sectors, and values. In spite of their inexperience, the members of a club do tend to be people

interested in the progress of the economy, readers of the financial press, specialized publications,

and seminar attendees.

In principle, the club functions as a learning school for all members, so it is advisable that the

winnings be settled when all of them agree. The liquidation would be associated with the

dissolution of the club. However, at any time and if so stated in the bylaws, the partners can

decide the distribution of a part of the benefits, which will always be proportional to the

contributions made by each of them.

Being part of an investment club is of interest to all people who love the stock market who do

not dare to invest individually and who believe they would feel more comfortable operating in

the company of others. In fact, making decisions together allows for several criteria and reduces

the job of finding economic information that is advisable to have before launching to invest in a

security.

Besides the possibility of sharing knowledge and learning more about the stock market, being a

member of one of these groups implies another series of advantages that make it attractive

against investment individually. Black Wallstreeter Consultation Services helps you create

investment clubs that allow you to enjoy lower rates when buying securities. The “brokers” with

whom the clubs work usually set lower fees to clubs than to individual investors, especially when

they perform a high number of operations.


Josiah Johnson