An investment club consists of a small group of individual investors who come together and contribute to a mutual fund to learn and build confidence in order for them to make educated investment decisions. Investment clubs have been around for decades and have provided people with limited funds to take part in larger investments and to get first hand experience and education.

The primary motive of an investment club is make the most money possible and for investors to share ideas and learn about the market. An investment club can be established as a legal entity, either as a legal partner or as a limited liability corporation with a framework that is similar to that of a mutual fund. But unlike that of the mutual fund an investment club does not require its members to pay management fees.

Benefits of an investment club

One of the benefits derived from joining an investment club is the opportunity to learn since there are various researches conducted in terms of what investments are profitable and which aren’t. An investment club also helps in reducing investment risk since club members can purchase a larger amount of stock at less personal risk.

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Moreover, an investment club is also a great help for many club members who are finding it hard to invest their own funds. With an investment club members are usually able to make better-informed decision especially about stock purchases based from the knowledge that they gained through their participation in any investment activity conducted by the club. Likewise, an investment club does not only offer investment opportunities but also opens the possibility of developing new friendships.

Considering joining?

Now that you know the benefits derived from joining an investment club you’re probably thinking of joining one. But before you do so there are some things that you need to do. First, some self-analysis; meaning you have to first know your current worth, monthly income and expenses. You also need to have a financial goal and you ought to know your risk tolerance level.

Likewise, it would be best to sort out your finances first. If you are one of those individuals that have super high credit card debt it would be best to settle these outstanding items before joining an investment club. And once you have joined an investment club, try to invest on a long-term investment scheme since short-term investments are often times influenced by fluctuations.

Souce: www.wealthonnet.com

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