Do you want to start an investment club from scratch? Or you need a sample investment club business plan template? If YES, then i advice you read on.
If you have always wanted to become an investor but don’t know exactly how and where to start, then you should consider joining an investment club or even start one of your own.
An investment club comprises like-minded entrepreneurs who study stocks, bonds, and other investments and pool their money together in order to make joint investment decisions. This way, all members of the club share the profits and losses on their combined investment.
Many investors start out with investment clubs because this is a great way to learn from others and to minimize risk. Starting an investment club isn’t as difficult as you might think. Here are the steps involved in starting a profitable investment club.
Starting an Investment Club – Sample Business Plan Template
1. Find potential members for your investment club
There are many ways to connect with others who might be interested in joining your investment club. If you plan to involve investors living in your locality, you can meet them in person. But if your potential members live far away, you can contact them online. Aim for a club with 7-20 members.
The more people you have, the easier it becomes to get enough funds to invest. But having many groups also comes with the difficulty in maintaining quality discussions and finding a place to meet. You can also start with your friends and neighbors. Tell your colleagues at work, too. They might be interested in joining your club or they might know others who might be interested.
2. Hold an initial meeting
Hold a meeting with those who are interested in joining your investment club. At the meeting, introduce others to your idea and discuss with them how your club will be formed as well as the goals of the club.
During the meeting, try to figure out why most members are interested in joining the club. Are they interested due to the club’s educational value or for the financial rewards? Also, you should find out if you all share the same philosophy and approach to investing (most investment clubs adopt a buy-and-hold strategy).
Also, it is important that you discuss how much each member can contribute financially on a monthly basis, and whether members will contribute the same amount or varying amounts depending on their financial capabilities. However, you must bear in mind that if members make different contributions, their returns will be in proportion to that.
Another issue worth discussing is whether you want to pool your contributions together and invest together, or you want to invest through individual accounts.
3. Hold another meeting to fine-tune your plans
Having discussed how the club will be formed and how members will contribute to it, hold another meeting to make your plans more concrete.
Define the various roles within the club (such as president, secretary, treasurer, investor, and so on) and appoint individuals to those roles. Decide how the club will manage payouts, divestiture, or dissolution. Define the policies on gaining new members and the steps you will take if a member decides to leave the club. Decide the name of the club. And decide when and where club meetings will be held as well as how long meetings will last.
4. Complete the necessary paperwork
Draft a document explaining the club’s operation procedures or operating agreement. This document will outline all the decisions arrived at in the previous meeting, and it should be signed by every member of the club. If you need help with this part, search the web for sample agreements and contracts.
If you are in the united states, you will need Articles of Incorporation and a Partnership Agreement. You will also need to apply for an Employer Identification Number (EIN) and file a “Certificate of Conducting Business as Partners” form. If you live outside the United States, you should contact the appropriate local agency or a seasoned attorney to find out the requirements that apply in your state or country.
5. Open bank account or brokerage account
You will need a bank account or brokerage account for holding the club’s funds. Most clubs start with both a bank account and a brokerage account. If you are opting for a brokerage account, choose a broker that suits your needs.
6. Establish an education program
One of the most valuable aspects of investment clubs is the education they can provide. In many cases, investment clubs are formed by people who are learning about investing and are at different stages of the learning process. In developing the education program, you must consider education for all levels of investing experience within your club. Make a syllabus from a list of topics and arrange for potential guest speakers.
7. Start investing
Decide on what areas of business to invest in and start investing in potentially profitable markets. Review club financials on a regular basis, and discuss promising investment ideas among club members.
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