investment clubs
Since the privatisations of the 80s and the building society handouts of the 90s, ordinary blokes in the street have started to discover the fun of buying and selling shares. Increasingly, men in their 30s and 40s are learning about the stock market through investment clubs, small groups of like-minded people who share knowledge as well as any profits and losses.
Where can I find one?
Probably down the pub. Nearly half of all investment clubs meet in their local each month and members tend to be either workmates or friends. It’s unlikely you’ll be able to join an existing club unless you know a member. There are limits on the number of people in a club; because investment clubs are run as partnerships, the Inland Revenue says there can be no more than 20 members. This turns out to be practical too. Too many members means making clear-cut investment decisions can become impossible. Why not start your own with some like-minded mates?
What will it cost?
Most clubs start with a minimum of five people, just so that costs and risks are shared. When you start off, you’ll probably pay in a lump sum to get things going. The commission charged by stockbrokers means that making investments of less than about £500 are unlikely to be worthwhile. On average, club members pay around £250 each to start a club then a regular monthly fee between £10 and £100. The average monthly sum is about £40.
So when do the profits come rolling in?
Investment clubs have done well over the years. They tend to stick to “safe” blue-chip companies on the FTSE100 but they have seen their portfolios grow by over 20 per cent a year on average, even last year which was a pretty bad one. In a bitter blow for the male race, women-only clubs tend to better than men-only ones – bringing in an average growth in their investments of over thirty per cent a year.
So what should I call my club?
Thinking up a club name comes from a long
tradition of thinking up team names for pub quizzes. You’ll find the
Millennium Prophets, the April Fools and NEDIC – the No Eye Deer
Investment Club.
The award for schoolboy humour goes to the Bedfordshire’s famous
Elizabeth Swalocs Investment Club – winner of ProShare’s 1997
Investment Club of the Year competition. With the pidgin French
slogan of “Quoi un fardeau de Swalocs”, this club was founded in
1994 at The Sow and Pigs pub in Toddington, Beds. The pub has since
burned down.
I want to know more.
It’s hard to believe but there’s actually a
charity that promotes share-based investment. It’s called ProShare
and it has helped the number of investment clubs grow from 350 to
8,500 in just seven years. It has a dedicated investment clubs
website at www.proshareclubs.co.uk and sells an excellent manual for
£29.50 that tells you all you need to know about clubs and includes
the tax forms you need to set one up.