Reviewed by Aug 27, 2020| Updated on
An investment club is a group of persons who meet to pool money and invest. Its members usually meet regularly to make investment decisions as a group by voting and precise tracking or gathering information to perform investment transactions outside the community.
Typically, the upper limit for the valuation of an investment club would be set, but there is no lower limit. Investment clubs provide participants with a way to learn about economies while meeting people with shared interests and collaborating with them.
History of Investment Club
While people have been investing in groups for thousands of years, although few investments could be considered free, the world's first investment club was supposedly founded in Texas in 1898 back in the days of the Wild West. Investment clubs have been seen as an ideal way to spread the risk.
Although the first known investment club dates back to the 1800s in Western America, the recent advent of numerous online groups dedicated to this form of investment has led to the personal investment boom in the United States. One reason people find interest in investment clubs is to learn how to invest.
## How to Start?
Industry analysts recommend that prospective members conform to these guidelines:
Consult a tax expert on the tax consequences of the chosen legal framework of the club.
Establish an investment plan, policy, and goals that require active involvement before investing.
Draw up a formal operating or membership agreement covering rules on asset management and adjustments in membership.
Evaluate fees for different methods, tools, and platforms to maximize returns.
Emphasis on learning and money-making.
Investment Clubs in India
Three investment clubs-Capital Ideas Club in Mumbai, Chennai Investors Club, and Equitydesk Club in Kolkata are making a small start in India. Additionally, the e-groups of mail service provider Yahoo Inc. have approximately 1,400 groups in different fields, such as short-selling, day trading, female investors, and online investing.
Considering how Indian stocks have run-up over the past few years, it's very likely that some of these sites will be used by day traders or brokers to drive up a stock they have invested. However, the club's owners say they discourage these connections from the online message boards, and they instead aim to bring in long-term investors.