Posted in Banks, Finance, Investment, Money, Share Clubs, Shares, Stock Exchange
We’ve been looking at the practicalities of share clubs and their advantages in sharing the risk of investment. Today we examine how best to set one up.
The number of members is of obvious importance. What is the opimum size? The average is between 10 and 15. The absolute minimum is three, but there’s a club in the UK with 500 members.
To begin with, it’s probably best to get everyone on board at the beginning. Latecomers can cause problems with accounting as they miss out on the initial funding.
At the start it’s advisable to get reasonable lump sums involved so that investments can be made immediately. Then a fixed monthly amount is usually specified to keep things ticking along. Average contributions are around £30 ($55) a month, paid in by standing order.
You will need to have a good set of rules or a constitution in place to ensure the smooth-running of the club. It should cover most eventualities, such as members resigning, to dividing profits among members.
The UK Proshare Investment Clubs has published a manual on how to achieve this with draft rules and a model constitution. This document forms the legal base of the club and is obviously of vital importance. Clubs are deemed to be partnerships and, in the UK, are recognized by HM Revenue and Customs and the City regulator, the FSA.
The final procedure is to find an interesting name, so that you can open a bank account.
Next: 3. Running a Club.
Posted in Finance, Investment, Money, Share Clubs, Shares, Stock Exchange
A share club is simply a group of like-minded people who join forces to invest in the stock market. They meet regularly and usually stipulate a fixed sum each month to invest.
Stock markets are doing very well right now so the attraction of share clubs is growing.
The majority of share clubs in Britain are members of Proshare Investment Clubs, which provides support and research tools for their members. Proshare is part is part of the Institute of Financial Services, which is dedicated to improving financial education and awareness in the UK.
Link: www.proshareclubs.co.uk.
Next: 2. Setting Up a Share Club.
Posted in Finance, Investment, Money, Share Clubs, Shares, Stock Exchange
Share clubs have become a popular way of adding sociability to investing in the stock market, as well as sharing some of the risks of investing. In the UK, there are more than 12,000 clubs with over 150,000 members.
So how do you go about setting up a share club? Here are some tips:
How to set up a share club
* Assess the level of risk you want to take and pick others who share the same objective.
* Pick suitable officers: Chairman, Treasurer and Secretary.
* Establish areas of expertise in the membership and assign roles accordingly.
* Keep up-to-date accounts of the value of the portfolio and each member’s contribution.
* Meticulously research the companies you invest in.
What not to do
* Don’t panic is shares do badly at first. Think long term.
* Set “stop-losses” — the level at which you will sell falling shares.
* Don’t let talkative members have an undue influence in the choice of shares. Give everyone a chance to select.
* Don’t pick a group of similar people, or you’ll end up with all shares in one sector.
* Don’t rush into buying. Any doubts should mean rejection.
Share clubs are good for some people, but don’t suit every personality type. Assess your own needs before joining one … or setting one up.
