Not surprisingly, picking the shares to invest in is the most critical, and the hardest, decision any share club has to make. So how do you go about it?

Unless you are involved in day trading, which can have severe downside risks, you should invest for the long term. Over time, the stock market has proved to be a better investment than almost any other platform. So expect to tie your money up for three to five years.

Ensure you have ample funds for your needs plus the dealing costs involved. It’s generally agreed you should have enough money to buy at least five different stocks before you start dealing. This will spread the risks and hopefully prevent a meltdown in your fortunes.

Share clubs have a different psychology from individuals. They have a tendency to be more adventurous. Spreading risk is one important way of managing that tendency.

Barclays Stockbrokers equity strategist, Henk Potts, says, “Share clubs have an element of fun so you can be a bit more adventurous. In most cases members have other investments such as unit trusts and tracker funds.”

Barclays recommends share clubs go with oil, gas and mining companies, plus media and banking. Stayaways include, food producers and tobacco firms.

Online stockbrokers are usually much cheaper and convenient, with the average trade now costing less than £10 ($18.40). To start trading, the club should set up a nominee account in the club’s name.

The treasurer will handle the buying and selling of shares. Many brokers are friendly to share clubs and will help and advise them. These include Barclays, The Share Centre, Selftrade and others.