Are you interested in starting an online investment club with friends? If YES, here is a complete guide to starting an investment club for fun and profit with NO money and no experience.
Okay, so we have provided you an in-depth sample investment club business plan template. We also took it further by analyzing and drafting a sample investment club marketing plan backed up by actionable guerrilla marketing ideas for investment clubs. In this article, we will be considering all the requirements for starting an investment club. So put on your entrepreneurial hat and let’s proceed.
There are several legal channel through which an individual can earn money or continue to increase his or her wealth without having a specialized business skills or opening a shop / office and one of such avenues is to join an investment club.
Table of Content
- Why Start a Investment Club?
- What Does it Take to Start an Investment Club Successfully?
- Starting an Investment Club for Fun/Profit – Market Research and Feasibility Studies
- Starting an Investment Club – Legal Matters
- Writing a Business Plan for your Investment Club
- Detailed Cost Analysis for Starting an Investment Club
- Starting an Investment Club – Technical & Manpower Details
- Starting an Investment Club – The Marketing Plan
- Tips for Running an Investment Club Successfully
Why Start a Investment Club?
You don’t need to wait until you have the whole money to invest in hedge fund or any other investment vehicles that requires that you must become an accredited investor before you start marketing money as an investor. If you have always wanted to become an investor but don’t know exactly how to go about it or where to start from, then you should consider joining an investment club or even starting your own investment club with people of like minds and investment philosophy et al.
Let us look at what an investment club is. An investment club can be said to comprise of a group of people which is less than 100 persons usually with same investment philosophy and ideology who meet for the purpose of pooling cash together and investing in any industry of their choice.
It is the norm for members of an investment club to have meetings on a regular basis firstly for the purpose of making investment decisions as a group through a voting process and recording of minutes. Secondly, for the purpose of reviewing the performance of their investment portfolios and also to attend to any business or social needs of the club and its members.
What Does it Take to Start an Investment Club Successfully?
It is very important to clearly state that one major factor that will count for the success of an investment club is the investment philosophy and perhaps the ideology and commitment of the members of the investment club. The truth is that, if the members of an investment club don’t share same investment philosophy and ideology, the investment club may likely struggle to make headway simply because there will always be clash of interest from time to time and that can stall progress.
As a matter of fact, a good number of big – time investors / accredited investors started out with investment clubs simply because it is a good way to learn the act of investing from professional investors and of course with minimal risks; the risks are usually spread across board. With an investment club, you can come in as a rookie and in few years gather loads of business and investment experiences that can make you a professional and successful investor.
Starting an Investment Club for Fun/Profit – A Complete Guide
- Industry Overview
Despite the fact that there are no known date or year when it comes to when people started investing their money for the sake of making profits, history has it that the first recognized investment club in the world started way back in 1898 by a group of business people who resides in Texas in the days of the Wide Wild West. In that period, you invest your money and go to sleep with the certainty that you will get a good return on your investment.
- Interesting Statistics About Investment Clubs
There are several types of investment clubs but statistics has it that the real estate investment clubs are known to be lower in risk and they also provide higher returns on investment which is usually between 21 percent and 70 percent. This is so because the need for accommodation is always on the increase in the united states and in other parts of the world.
Although investment clubs are not known to be highly regulated in the United States, but they are expected to conduct their businesses in tandem with some basic investment, financial and business rules and regulations in their host countries.
This is why in the United States of America, despite the fact that there is no lower investment limit for an investment club, but the highest investment limit for an investment club is pegged at $25M on the sum of funds invested as individuals or as a group.
The investment club industry in the United States of America cannot be said to be oversaturated even though there are several investment clubs scattered all across the country. The truth is that there are several investment opportunities available for investment clubs to leverage on hence the reason why people start investment clubs. In essence, the industry can be said to be ever – green. This is so because the business world is ever – evolving and there will always be profitable investment vehicle to bank your money on.
Over and above, the near – freedom that investment clubs enjoy in the United States of America and of course in most parts of the world gives room for more investment clubs to spring up on a regular basis. No doubt the rate at which investment clubs close shops can be alarming, but that does not in any way stop people from starting an investment club or joining an existing investment club. People are motivated and encouraged to join investment clubs simply because it is one of the easiest platforms to learn the art of investing from people with good investment background and also to increase their wealth.
Starting an Investment Club for Fun/Profit – Market Research and Feasibility Studies
- Demographics and Psychographics
Firstly, if you are looking towards starting an investment club, your investment mission, your investment policy, your investment ideology, your investment philosophy and of course your investment goals are what should guide you in admitting people into your investment club and also to determine the type of investment club to start and the industry you are going to concentrate your investment in.
In view of that, the demographic and psychographic composition of your investment club should be guided by the factors stated above. It is safer never to allow sentiments to influence the type of people you allow to join your investment club or the investment vehicle you put your money on. If you do that, you will likely face conflicting interest from your club members and when you and your club members are not always on same page, you may not achieve your investment goals and the objectives of the club.
For instance, if you are a sport man or woman, it will be easier for you to attract other sports men and women to join you in building and investment club. Also if you are a farmer, it will sure be easier for you to attract other farmers to join you in building and investment club. The bottom line is that you should concentrate on first marketing your marketing your investment club to people in same industry as you do before sourcing from other areas. This is so because it is easier for you guys to understand yourself and understanding is one of the factors that contribute to the success of an investment club.
List of Niche ideas Within the Investment Industry That You Can specialize in
These are some of the niches ideas you can choose from if you are looking towards starting an investment club;
- Stock, Mutual Fund or Bond Investment Clubs
- Business Investment Clubs
- High School Extracurricular Investment Clubs
- Hybrid Investment Clubs
- Real Estate Investment Clubs
- Agriculture (Agro – allied and farming) Investment Club
- Oil and Gas Investment Club
- Information Communication Technology (ICT) Investment Club
- Transportation Investment Club
- Network Marketing Investment Club
- Export Investment Club
- Co – operative and Thrift Investment Club
Please note that this industry is flexible and with creativity, you can create your own niche as long as it serves the interest for which the investment club was formed.
The Level of Competition in the Investment Industry
The truth is that, there is little or no competition in this industry. If you start an investment club, you have to package it in such a way that you can easily attract people of like minds to join your club. The truth is that when it comes to sourcing for people to join your investment club, you just have to only market the club to people with similar investment ideology and investment philosophy or to people who you know are looking towards learning the art of investing.
On the other hand, when it comes to investing in areas of your interest, you are not going to be competing with anybody as well. This is so because you can only invest the amount of cash pulled together by members of your investment club as long as it does not exceed the upper limit of $25 million as set by the regulating authority.
One thing is certain, if you are able to stay competitive and profitable, you won’t struggle to market your investment club to people but rather you will be in a position to turn down the request of some people who wants to join your investment club.
List of Well – Known Brands in the Industry
These are some of the leading investment clubs in the United States of America;
- Billionaire Hustler Club
- FPS WebinarFPS Trading Suite
- Just Been Paid
- Max Returns High Yield Investments
- 18 Wheel Venture Club
- 1998 Miller Family Investments
- 2010ad Investment Club LLC
- 3200 N Central Ventures LLC
- 3706 Tnt Investors LLC
- 425 Club LLC
- 4 Investments LLC
- 4m Investment Club LLC
- 524 Putnam Ave LLC
- Aam Homebuyers LLC
- Abeam Investment Club
- Alamo Interests
- Allison Investment Management
- Altanas Investment LLC
- Amin Family Limited Partnership
- Amyg Investment Group
- A Plus Accounting & Management Corporation
Essentially, your decision to start an investment club should be driven by your quest to multiple wealth and perhaps to expand your investment horizon hence you need to conduct a thorough economic analysis so as to reduce unnecessary business risks to the barest minimum.
Basically, aside from the pool of cash required for investing in various investment interests, it is quite cheap to start an investment club. You don’t necessarily need an office space and you don’t need loads of paid employees to run an investment club. You can actually operate an investment club from a shared office, virtual office or office from your home and with just one paid staff (an administrator).
Starting an Investment Club from Scratch vs Buying a Franchise
If you are looking towards starting an investment club, you are left with just one option – and the option is to start from the very scratch. There is no franchise for investment clubs for now.
Besides it is not a difficult task to start an investment club from the scratch. All you need to get started are little investment experience, people with same investment ideology and philosophy, determination and focus.
Possible Threats and Challenges You Will Face When Starting an Investment Club
Some of the obvious challenges you are likely going to face when starting an investment club is the ability to attract serious – minded people with same investment ideology, and philosophy. The truth is that if you are not able to get people that share same investment ideology and philosophy like you, you are likely going to struggle to grow the investment club.
Another challenge that you are likely going to face is economic downturn; if the economy is in bad shape, history has it that people usually would not have money to invest hence they won’t want to join an investment club and also bad economy limits investments options. Unfavorable government financial or business policies can also affect the survival of investment clubs.
Starting an Investment Club – Legal Matters
- Best Legal Entity to use for a Investment Club
Basically, one of the most important factors to consider before choosing a legal entity for your investment club is the kind of investment club you want to run; a good understanding of the nature of the investment club you intend running. The truth is that different investment club is expected to have different legal entity as it suits them.
As a matter of fact, investment clubs are generally formed as general partnerships or Limited Liability Company, LCC. You can also choose a “C” corporation or an “S” corporation for your investment club. It is important to clearly state that these different forms of legal structure for business has its own advantages and disadvantages; which is why you must weigh your options properly before making your choice.
These are some of the basic factors you should consider before choosing a legal entity for your investment club; limitation of personal liability, ease of transferability, admission of new owners (members) and investors’ expectation and of course taxes. If you take your time to critically study the various legal entities to use for your investment club, you will quite agree that indeed limited liability company; an LLC is the most suitable. You can start your investment club as limited liability company (LLC) and in future convert it to a ‘C’ corporation or a ‘S’ corporations especially when you have the plans of growing the club.
Upgrading to a ‘C’ corporation or ‘S’ corporation will give you the opportunity to grow your investment club so as to pull – in enough cash and of course take advantage of every available investment opportunities, you will enjoy separate tax structure, and you can easily transfer ownership of the investment club; you will enjoy flexibility in ownership and in your management structures.
Some Catchy Names You Can Adopt for Your Investment Club
On the average, investment club usually take on the prefix investment club so as to clearly point out what the club is all about. If you are looking towards starting your own investment club, then you have the opportunity to choose a name that falls within the following pattern;
- Penny Wise Investment Club
- Eagles Groups of Investors, LLC
- Espanyol Investment Community
- Coin Worth Investment Club, LLC
- Melvin and Co Trading Company
- Unity and Progress Investment Club
- Chinese – American Investment Club, LLC
- Like – Minds Real Estate Investment Club
- Unity, Peace and Progress Investment Club, LLC
The Best Insurance Needed for an Investment Club
The fact that starting an investment club is strictly for investing funds than running a well structure company, does not mean that if you have one or two staff that you won’t purchase the needed insurance cover that an employer of labor is expected to purchase. As a matter of fact, you would need some basic insurance policy since you are expected to invest money into various investment portfolios.
You can consult your insurance broker to advice you on the appropriate insurance policies to buy; they are in the best position to give you such advice. Here are some of the basic insurance covers that you should consider purchasing if you want to start your own investment club in the United States of America;
- General insurance
- Health insurance
- Liability insurance
- Workers Compensation
- Overhead expense disability insurance
- Business owner’s policy group insurance
- Risk Insurance
- Credit insurance
- Deposit insurance
- Financial reinsurance
- Lenders mortgage insurance
- Payment protection insurance
Is Intellectual Property Protection / Trademark Needed for an Investment Club?
If you are considering starting your own investment club, usually you may not have any need to file for intellectual property protection or trademark. This is so because the nature of the business makes it possible for you to successful run the business without having any cause to challenge anybody in court for illegally making use of your club’s intellectual properties.
But if you just want to protect your company’s logo and other documents or software that are unique to your investment club. Then you can go ahead to file for intellectual property protection and trademark. If you want to register your trademark or intellectually property, you are expected to begin the process by filing an application with the USPTO. The final approval of your trademark is subjected to the review of attorneys as required by USPTO
Is Professional Certification Required to Run an Investment Club?
Basically, you can start an investment club without any special professional certification; the industry is open to all and sundry as long as you know how to manage people’s funds and avoiding unnecessary risks.
However, it will not be a bad idea for you to encourage your members to pursue various relevant professional certifications. The knowledge and experience of members of your investment club will definitely count towards the advantage of the club.
List of Legal Documents You Need to Run an Investment Club
These are some of the basic legal document that you are expected to have in place if you want to run your own investment club in the United States of America;
- Certificate of Incorporation
- Business License
- Business Plan (Investment Plan)
- Non – disclosure Agreement
- Employment Agreement
- Operating Agreement for LLCs
- Insurance Policy
- Grand Rules / Membership Policy Document
Writing a Business Plan for your Investment Club
Interestingly, the fact that you want to start an investment club does not in any way absolve you from writing a business plan or an investment plan as the case may be. The truth is that, if you can successfully pen down your investment strategies, business concept and the strategies you intend working with to achieve your clubs cum investment aims, goals and objectives, then you would have successfully create your own business blue – print.
It is not only when you want to set up a conglomerate or multi – million dollars corporations that you are required to write a business plan; ideally if you call what you want to do business or invest hard earned money into businesses, then you would need a business cum investment plan to work with.
A business plan is the blue print of your business; it is a business document that can aid you to successfully set up a business and also administer / manage the business. It is not enough to just write a business plan for the sake of writing one, your business plan should be able to pass reality check; you must put relevant facts, figures and statistics into consideration when writing your business plan.
The truth is that, the main aim of writing a business plan is not just for the sake of having a business document in place; but to have a detail guide on how to effectively set – up, run and manage your business (investment club). Your business plan should outline and cover strategies on how you intend to operate your investment club.
When writing your business plan, ensure that you are moderate when it comes to setting projections on income generation et al. It is better to be on the safer side when you are calculating your future income.
These are some key factors that you should also consider when drafting your business plan;
Executive summary and Company’s descriptions: you are expected to write about the concept of your business, descriptions of your investment club, your club’s vision statement, and mission statement, where your investment club will be located, how you intend sourcing for members, the industries you want to invest in for and perhaps why people should patronize your goods or services if you into the production of goods and services.
Other key components that should not be missing from your investment club business plan are your service offering, SWOT analysis, marketing and sales analysis / strategies, pricing, costing and financial projection, management techniques, expansion strategies, publicity and advertising strategy, budget and start – up capital generation et al.
Detailed Cost Analysis for Starting an Investment Club
Starting an investment club generally requires minimal start – up capital, all you would need money for is to register the investment club, secure a space for administrative works, a venue where your members will be meeting regularly, prepare membership pack and promote your investment club (both online and off – line).
Aside from these basic expenses, you would also need pool cash for the purpose of investing in various investment portfolios. In view of that, when it comes to starting a small scale investment club, the following expenditure should guide you;
- The total fee for incorporating the investment club in the United States – $750.
- The budget for the basic insurance policy covers, permits and license – $2,500
- The amount needed to acquire a suitable Office facility / secretariat with a meeting space for your club members (Re – Construction of the facility inclusive) – $10,000.
- The Cost for equipping the office (computers, printers, fax machines, furniture, telephones, filing cabins, safety gadgets and electronics et al) – $5,000
- The Cost of launching your official Website for your investment club – $600
- Budget for paying at least two employees for 3 months and utility bills – $10,000
- Additional Expenditure (Business cards, Signage, Adverts, brochures and Promotions et al) – $2,500
- Miscellaneous – $1,000
- The fund needed for investment – $5 million
Going by the report from the research and feasibility studies, you will need less than $50,000 plus an additional $5 million (investment fund) to set up a small scale investment club in the United States of America
You will need over a hundred thousand U.S. dollars plus an additional $10 million (investment fund) to successfully set – up a medium scale investment club in the United States.
If you are considering starting a large scale investment club, then you should look towards budgeting well over 150,000 United States Dollars plus an additional $25 million (investment fund).
Please note that there is no limit to the lowest amount you can invest as an investment club, but the highest amount you can invest as an investment club that is in the United States is pegged at $25 million.
- Financing Your Investment Club
Aside from the fact that you are going to encourage people to join your investment club and pool cash together for the purpose of investing the cash, you would need money to go through the process of registering the investment club and of course setting up a structure that will make it easier for you to effectively attract like minds and to effectively run the investment club.
So in essence, you would be required to source for start – up capital to start your investment club especially if you don’t have the money saved up somewhere. On the average, you are not expected to go through the stress of sourcing for start – up capital as an entrepreneur who is sourcing for money to start a normal business.
Over and above, the rule of thumb when it comes to financing a business is to write a good business plan. If you have a good and workable business plan in place, you may not have to labor hard before convincing your bank, investors and your friends to invest in your business; with a good business plan and good managerial skills, they can tell if their investment will be safe under your watch.
Here are some of the options you can explore when sourcing for start – up capital for your investment club;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Inviting interested investors to join your investment club
- Applying for Loan from your Bank / banks
- Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
- Source for soft loans from your family members and your friends.
Securing a Location for Your Investment Club
The fact that you can operate your investment club from your home does not mean that location has little influence on the success of an investment club. The idea of starting an investment club is to encourage a group of people with same investment ideology and philosophy or people who are interested in learning the art of investing to come together and pool cash together for the purpose of exploring investment opportunities as it concerns the club’s area of interest.
So in essence, it will be safer to study the demographic composition of the location you intend starting an investment club before pitching your tent. For example, if you want to start a High School Extracurricular Investment Clubs it will be out of place to locate the investment club in a community where there are no secondary schools or in a community that is home to retirees / old people. The type of people you want to attract and the nature of investment club you intend starting should guide you in making a choice of a location.
Starting an Investment Club – Technical & Manpower Details
In the real sense, there is no technicality when it comes to starting an investment club, the only reason why you would need technical input for the club is in customized software applications that will help you track and manage your investment portfolios.
When it comes to manpower for an investment club, you can actually make do with just one full – time employee; an administrator that can help you man your secretariat and handle all the necessary administrative jobs on the behalf of the members of the investment club. Every other person you would need is supposed to be members of the investment club; they are the people that are expected to pool their cash together and explore safe and available areas to invest in.
As regards, office equipment, you would need just the basic office equipment to run a secretariat for an investment club. Office equipment such as tables, chairs, computers, printing machines, fax machines, photocopier, telephones, cabins and air conditioner et al and you can actually go for fairly used ones. It is economical and it will serve the purpose you want to use them for.
When it comes to choosing between renting an office space and leasing, it is advisable to rent on a short term basis with the option of renewal. This is so because the success of an investment clubs is not tied to an office facility but the right investment choices that the club makes.
Starting an Investment Club – The Marketing Plan
- Marketing ideas and strategies for an investment club
The fact that you are not setting up a conventional business does not mean that you will not need to pay attention to generating good marketing ideas and strategies. The truth is that no matter what you intend doing, it is your marketing ideas and strategies that will help attract the kind of people you want to work with.
It takes a good marketing idea and strategy for you to be able to convince people to pick up membership in your investment club and of course it takes good marketing ideas and strategies for you to be able to sale your investment ideas to people.
Here are some of the platforms you can utilize to market your investment club;
- Introduce your investment club by sending introductory letters alongside your brochure to your target market
- Advertise your investment club in relevant business magazines, radio stations and TV stations (make yourself available for talk shows and interactive sessions on TV and Radios)
- List your investment club on local directories / yellow pages (both online and offline)
- Attend business expos, seminars, and book fairs et al with the aim of marketing your investment club to like minds
- Leverage on the internet (social media platforms and blogs) to promote your investment club
Possible Competitive Strategies for Winning your Competitors in the Investment Club Industry
Despite the fact that there little or no competition when it comes to investment clubs does not mean that you should not be on the top of your game. As a matter of fact, your major competition is within your club. The truth is that if members of your investment clubs are not getting good returns in their investment or if they tend to lose their investments, they are likely going to leave your investment club and either source for a successful investment club to join or start their own investment club.
So basically what you need to do is to ensure that you give members of your investment club value for their monies so as to prevent them from sourcing for other investment clubs to join.
Possible Ways to Increase Customer Retention for an Investment Club
If you are thinking of retaining members of your investment club and also to welcome new members on a regular basis, then you should make your meetings entertaining and educative at the same time. Of course people that join investment clubs know that the major reason why they join the club is to increase their wealth, but if the club is boring, they may consider quitting.
Once in a while you should organize social outings for members of your clubs, you should also offer freebies to consistent and committed members and you can create a reward system to encourage longevity and quick payment of dues and investment capitals.
Strategies to Boost your Investment Club Brand Awareness and Create a Corporate identity
If you are in business and you are not deliberate about boosting you brand and communicating your corporate identity, then you should be ready to take on whatever the society portray your business to be. One of the secret of larger corporations is that they are willing to spend fortunes year in and year out to boost their brand awareness and to continue to communicate their corporate identity.
If your intention of starting an investment club is to grow the investment club beyond just a hand full of people and to have an investment club brand that is recognized in the whole of the United States of America, then you must be ready to spend some money on promotion and advertisement of your brand.
In promoting your investment club brand and corporate identity, you should leverage on print and electronic media. As a matter of fact, it is cost effective to use the internet and social media platforms to promote your brands, besides it is pretty much effective and wide reaching.
Another strategy is to sponsor relevant TV and radio programs, advertise your business in magazines and newspapers.
Tips for Running an Investment Club Successfully
When it comes to successfully running an investment club, the membership meetings and other business activities must be conducted in an organized format. No doubt, the level of organization may vary based on the people that make up the investment club and of course the niche idea of the investment club.
On the average, an investment club is expected to adopt medium through which they can communicate with their members aside from the regular meetings. Such mediums could be via BBM groups, WhatsApp group, emailing group or even telephone conferencing.
The bottom line is that the success of an investment club is associated with the constant communications amongst its members. When members of an investment club communicate regularly, it will not only give them the opportunity to be on same page per time, but it was also give them the opportunity to share investment ideas and investment opportunities and also for them to review their investment options amongst many other advantages.
The bottom line is that regular meetings are essential for the success of an investment club and there are basic agenda that must be followed whenever there are official meetings for an investment club.
Basically whenever an investment club meet for official meetings, just like the average club, they are supposed to start with opening prayers (optional), roll call, minutes from the last meeting, presentation of net asset value of the club, presentation of available funds that can be invested, deliberation on investment opportunities available to them, assigning of responsibility to members, any other business and formal close of meeting (closing prayers).
Before that as it may, as the chief executive officer or president of an investment club, it is your responsibility to give direction to the club. You should encourage members of your club to pursue certifications in their various area of specializations; it will help your club’s profile and of course it will help the individuals.
Lastly, ensure that you keep your doors open for suggestions from members of your investment club and from other friends and family members who are interested in the success of your investment club.
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