I’ve heard that a good way to learn about investing is to start an investment club. Why? How do I learn more about them?
The main advantages to joining or starting an investment club are:
- It doesn’t cost much to get started. Most investment clubs are formed by people who have anywhere from $25 to $100 a month to invest.
- Your risk is reduced. When you pool your contributions with other members of your club, you have a wider range of investment choices. By pooling your $50 contribution with those of 14 other members, you are creating a monthly investment contribution of $750 which means you can start building a diversified portfolio within a few months.
- Opportunities to learn. With the guidance of more experienced investors, and the advice of professional investment advisors, investment clubs represent a relatively low-risk, low-cost way to learn about investments as you go.
- Lower costs. Brokerage firms charge commissions based on a sliding scale, that includes a minimum commission amount for all small orders. This means it’s more economical to buy larger amounts of shares.