- 1). Recruit investment club members. Select members who share your general investment philosophy, and who are open to working cooperatively to achieve common investment goals. Talk to business group colleagues, church or synagogue members and social contacts with whom you share a rapport. Host an introductory meeting to allow members to get acquainted and establish a group identity.
- 2). Define your investment club structure. Meet with a Certified Public Accountant to select an investment club business structure. Many clubs utilize legal partnership or limited liability company formats. Develop a standard accounting system that tracks members' contributions and future withdrawals, Investopedia.com. recommends.
Ask your accountant if the investment club must register with the Securities and Exchange Commission, or SEC, the federal agency tasked with financial market oversight. Clubs are generally not required to register with the SEC, but the requirement may apply to some investment club structures. - 3). Assign club member responsibilities. Develop a written investment club agreement conforming with the club's organizational structure. Include club officers' names and respective duties, along with meeting schedules and locations. Address meeting attendance requirements, notes The Texas Cooperative Extension Office of Texas A&M University. Assign members to investigate prospective stocks or mutual funds, research professional speakers and maintain a market watch to identify relevant trends. Rotate roles to broaden members' knowledge base.
- 4). Open bank and brokerage accounts. Establish a business account at a local bank with favorable terms. Decide on the members authorized to use the account. Open an account with an online brokerage company that charges lower transaction fees than a full-service financial services company. You may be required to establish the account in the names of individual members, or the company may allow you to use the investment club name.
- 5). Schedule investment professional speakers. Invite investment brokers, financial planners, accountants and attorneys to speak about each professional's role in the investment process. Ask each expert to speak about the potential hazards of insufficient pre-investment preparation. Request that speakers be available for ongoing consultations.
- 6). Develop an initial investment strategy. Review the investment club's goals, and evaluate each potential investment against those goals. Consider factors such as past performance against similar stocks or funds, overall product growth potential and relevant legal or financial issues. Conduct a group vote to select an introductory investment package, and contact your broker to complete those investment purchases.
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