How to Start an Investment Club
Investment clubs are becoming more popular, and for good reason. These clubs offer members a chance to invest in opportunities they may not normally have. It is also a wonderful chance to learn and grow financial intelligence. Starting an investment club requires very little other than enthusiastic participants.
- Make a list of the people you will invite or propose joining the club. Ensure you are choosing people whom you will trust with your investments. The best people to join investment clubs are those who want to learn about money, and are dedicated to putting in the effort.
- Pick an official name for your club once you have gathered members. A name will help make the investment club seem real and official. You will also need a name with which to register your club as a money-making business.
- Agree on how much each person will invest in the club. Investment clubs generally require every member to give regular contributions to the investment fund. These contributions can be equal divided however the members choose. Write down the agreement so there is no confusion later.
- Select officers for your investment club. You will need, at the minimum, a president, treasurer and secretary. Naming officers is important for delegating out responsibilities. This will ensure that operations are done correctly and on time.
- Draft an operating agreement. Your operating agreement will govern how your club does business and how money is handled. This is extremely important for the smooth operation of the investment club. If there are ever any disagreements among members, you will be able to turn to the operating agreement to settle the dispute.
- Apply for a federal tax ID number. This is done easily, either over the phone or online. Since your investment club will be making profits, it will be required to pay taxes.
- Register your investment club as a business with the state. Limited Liability Companies, or LLCs, offer the most liability protection and flexibility for its members. Learn about LLCs and how they operate by visiting your state’s Secretary of State Website.
- Open a brokerage account in your investments club’s official name. This is the account you will use to make your investments. The brokerage account can be with a local company or through an online brokerage.
- Hold regular meetings once the investment club is underway. Meetings are for members to discuss future investment opportunities, as well as evaluate how current investments are progressing. These meetings also give members a chance to learn from each other increase their financial knowledge.