IE8003 Start Your Own Investment Club PPT - bivio of Successful Clubs ... Start Your Own Investment Club . Intro to Investment Clubs – Investopedia @ (Search ‘investment club’)
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•• Learn how to invest in the stock marketLearn how to invest in the stock market•• Shore up retirementShore up retirement•• Make new friendsMake new friends•• Have fun!Have fun!
•• Part One: Introduction to the MechanicsPart One: Introduction to the MechanicsBased on article of the same name atBased on article of the same name atwww.bivio.com/crowriverwww.bivio.com/crowriver; Newcomers ; Newcomers
Do you have what it takes to be in a club?Do you have what it takes to be in a club?•• A clear purpose?A clear purpose?•• Enjoy reading?Enjoy reading?•• Enjoy playing with numbers?Enjoy playing with numbers?•• 66--10 hours per month to spare?10 hours per month to spare?•• A computer with internet service?A computer with internet service?
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StatisticsStatistics
Reported by an N.A.I.C. Chapter DirectorReported by an N.A.I.C. Chapter Director::•• 80% of new Clubs don80% of new Clubs don’’t survive 18 monthst survive 18 months
•• #1 reason: Lack of a shared philosophy#1 reason: Lack of a shared philosophy
Attributes of Successful ClubsAttributes of Successful Clubs•• Members enjoy each otherMembers enjoy each other’’s company and s company and
communicate between the meetingscommunicate between the meetings•• They agree on the same investment philosophyThey agree on the same investment philosophy•• The club has a longThe club has a long--term, growth strategyterm, growth strategy•• All members attend and participate at every meetingAll members attend and participate at every meeting•• Stocks are never purchased without a complete studyStocks are never purchased without a complete study•• All members have computers and online serviceAll members have computers and online service•• The club uses computerized, unitThe club uses computerized, unit--based accounting based accounting
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Why Clubs FailWhy Clubs Fail……
•• Members donMembers don’’t pull their weightt pull their weight(and clubs who allow them to stay)(and clubs who allow them to stay)
•• Mild interest; lack of regular participationMild interest; lack of regular participation•• Failure to show up or pay on timeFailure to show up or pay on time•• Failure to stick with an investing philosophyFailure to stick with an investing philosophy
•• Failure to research stocks before buying themFailure to research stocks before buying them•• Failure to run the club as a businessFailure to run the club as a business•• Failure to keep it interestingFailure to keep it interesting•• Allowing (forcing?) a few to do all the workAllowing (forcing?) a few to do all the work•• Failure to maintain good financial recordsFailure to maintain good financial records
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Choosing the Right MembersChoosing the Right MembersChoose them carefully!Choose them carefully!
•• Do they have a strong work ethic?Do they have a strong work ethic?•• Are they financially capable of participating?Are they financially capable of participating?•• Are they typically reliable? Are they typically reliable? •• Will they show up and pay their dues on time?Will they show up and pay their dues on time?•• Are they team players?Are they team players?•• Do you know if thereDo you know if there’’s room in their schedules tos room in their schedules to
Choosing the Right MembersChoosing the Right Members•• Do they travel for work, or will the commute to theDo they travel for work, or will the commute to the
meetings be a problem for them?meetings be a problem for them?•• Are they willing to commit for the long term?Are they willing to commit for the long term?•• Would you trust them with your money and yourWould you trust them with your money and your
future?future?•• Would you want to go into business with them? Would you want to go into business with them?
Because this is exactly what you will be doing!Because this is exactly what you will be doing!
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Investing StylesInvesting Styles
•• Traders vs. InvestorsTraders vs. Investors
•• Momentum InvestorsMomentum Investors–– Use technical analysisUse technical analysis–– Gauge price movementsGauge price movements–– Make decisions based on investor sentimentMake decisions based on investor sentiment
•• Growth InvestorsGrowth Investors–– Use fundamental analysisUse fundamental analysis–– Sales and earnings growth; good futureSales and earnings growth; good future
•• Value InvestorsValue Investors–– Use fundamental analysisUse fundamental analysis–– Look for stocks that have stumbledLook for stocks that have stumbled
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Investing StylesInvesting Styles
Most Investment Clubs chooseMost Investment Clubs choose……
DisclaimerDisclaimerYour instructor is not an attorneyYour instructor is not an attorney
This should not be construed as legal adviceThis should not be construed as legal adviceThe information may not be completeThe information may not be complete
Do your own due diligenceDo your own due diligenceSeek legal Seek legal councelcouncel, if necessary, if necessary
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Getting LegalGetting Legal
Types of business entities available to clubs:Types of business entities available to clubs:•• corporationscorporations•• limited liability companieslimited liability companies•• general partnershipsgeneral partnerships•• limited partnershipslimited partnerships
•• Most clubs choose general partnershipsMost clubs choose general partnerships
File an Assumed NameFile an Assumed Name•• Secretary of State Secretary of State www.secretaryofstate.comwww.secretaryofstate.com•• Most have an Assumed Name formMost have an Assumed Name form•• Check name availabilityCheck name availability•• Complete form and prepare mailComplete form and prepare mail•• Check on the requirement & cost of a public Check on the requirement & cost of a public
noticenotice
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Getting LegalGetting Legal
•• Obtain Federal Tax ID number (EIN)Obtain Federal Tax ID number (EIN)•• Go to Go to www.irs.govwww.irs.gov•• Click on Online EIN ApplicationClick on Online EIN Application•• Complete FormComplete Form•• No CostNo Cost
•• Both require application; some with notary Both require application; some with notary on all signatureson all signatures
•• Copy of Partnership AgreementCopy of Partnership Agreement•• Copy of Assumed Name CertificateCopy of Assumed Name Certificate•• Copy of EIN application w/numberCopy of EIN application w/number•• Apply directly Apply directly afterafter you start the clubyou start the club
•• Bank?Bank?•• Brokerage with check writing privileges?Brokerage with check writing privileges?•• Choose based on benefitsChoose based on benefits
–– Ease of application processEase of application process–– Do they require large initial funding?Do they require large initial funding?–– Are there minimum check writing limits?Are there minimum check writing limits?–– How long is the clearing process for deposits?How long is the clearing process for deposits?
UnitUnit--Based AccountingBased Accounting•• Similar to Mutual Fund accountingSimilar to Mutual Fund accounting•• The fundThe fund’’s total assets div. by shares = NAVs total assets div. by shares = NAV
or Net Asset Value per shareor Net Asset Value per share•• You buy more shares based on NAV priceYou buy more shares based on NAV price•• Same with clubSame with club
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Club AccountingClub Accounting
The Benefits:The Benefits:•• Accounting software handles all transactionsAccounting software handles all transactions•• Software company handles federal taxesSoftware company handles federal taxes•• Units donUnits don’’t require equal ownershipt require equal ownership•• Makes it affordable for new membersMakes it affordable for new members•• Easy transition for new TreasurerEasy transition for new Treasurer
(See handout for your accounting options)(See handout for your accounting options)
19. Sources for Club Education StockCentral at www.stockcentral.com – Online investment education events
Manifest Investing at www.manifestinvesting.com - Online Continuous Classrooms ($)
Investing for Growth on CompuServe at http://Community.compuserve.com/naic - Online Workshops
BetterInvesting at www.betterinvesting.org – Local and online classes ($)
BetterInvesting Tutorials from the Florida Space Coast Chapter at www.naicspace.org
Crow River Education page at www.bivio.com/crowriver
GenXchange Education page at www.genxchange.com
Doug Gerlach’s Club website at www.douglasgerlach.com/clubs/educate
Any of the books listed above
20. Source for Help Members of the Crow River Investment Club at www.bivio.com/crowriver
The investing community on StockCentral at www.stockcentral.com
The Investing for Growth community on CompuServe at http://community.compuserve.com/naic
The Manifest community at www.manifestinvesting.com (Premium service)
The sample documents on the above club websites are meant to give you ideas. Be creative with your own documents. Please do not post other clubs’ documents to another public website without express permission from those clubs. Link! Don’t Steal!
19. Sources for Club Education StockCentral at www.stockcentral.com – Online investment education events
Manifest Investing at www.manifestinvesting.com - Online Continuous Classrooms ($)
Investing for Growth on CompuServe at http://Community.compuserve.com/naic - Online Workshops
BetterInvesting at www.betterinvesting.org – Local and online classes ($)
BetterInvesting Tutorials from the Florida Space Coast Chapter at www.naicspace.org
Crow River Education page at www.bivio.com/crowriver
GenXchange Education page at www.genxchange.com
Doug Gerlach’s Club website at www.douglasgerlach.com/clubs/educate
Any of the books listed above
20. Source for Help Members of the Crow River Investment Club at www.bivio.com/crowriver
The investing community on StockCentral at www.stockcentral.com
The Investing for Growth community on CompuServe at http://community.compuserve.com/naic
The Manifest community at www.manifestinvesting.com (Premium service)
The sample documents on the above club websites are meant to give you ideas. Be creative with your own documents. Please do not post other clubs’ documents to another public website without express permission from those clubs. Link! Don’t Steal!