This chapter is from the book
This chapter is from the book
This chapter is from the book
Investment Clubs
Jason fondly remembers playing at his Uncle John's house on weekends when he was a small boy and noticing that people would visit his uncle and give him money. As he got older, he discovered that these people were paying his uncle rent for rooms they rented from him. This sparked Jason's interest in money and investing. As soon as Jason graduated from college he began investing. His investments were modest at first. He wasn't making much money, and he had significant debt from student loans. But Jason was determined to invest at least a small portion of his income. He convinced several of his friends to pool their money and start an investment club. That was 25 years ago. Although the investment club is no longer intact, it helped Jason gain experience as an investor. Today, Jason has an impressive portfolio of stocks, bonds, mutual funds, and real estate holdings.
Investing wisely takes careful research and attention to detail. Sometimes, it can be hard to get motivated to research investments on your own. Investment clubs are a great way to share the effort as well as the rewards of investing. Clubs can be made up of friends, coworkers, or family members. Most clubs have 10 to 15 members and meet monthly to discuss the club's investments. Each member contributes a set amount of money each month. Members may be assigned different tasks such as tracking economic conditions, researching particular investments, or reporting on the club's investment performance. That way, one person doesn't shoulder the burden, and everyone benefits. Investment clubs also have the benefit of being social outlets as well.
Investment clubs have proven to be a successful way to invest money. The National Association of Investors Corporation (NAIC) reports that more than half of its member clubs regularly beat the S&P 500-stock index. That's comparable to a professional portfolio manager's record.
Jason's investment club proved to be an excellent introduction to the world of investing. The club had 16 members at its peak. The members conducted analyses to identify strong companies that had growing sales and profits so they could buy them and hold the stocks for several years. The club picked several winning stocks, along with a few losers, but each member learned a lot in the process. The club eventually disbanded eight years after its inception because many of the members relocated or married and could no longer dedicate time and resources to the club. To this day, Jason has fond memories of the club and credits the experience for helping him build the investment portfolio he has today.
Using the basic savings and investment tools—savings accounts, stocks and bond investments, and real estate—you can build your individual financial portfolio. Once you have the basics in hand, you can then turn to your financial support team to fully flesh out and understand the intricacies of your unique portfolio.
To complete our discussion of building a support system, we have one more relationship that warrants mention in the next chapter, that is the relationship that you have with the place you call "home."