Investment clubs offer many advantages but you should guard against these:
Make sure nobody runs off with the club chequebook and cashes in your joint funds. Never neglect the legal formalities of setting up the club. A good precaution is to ensure that two people have to sign up to any financial transactions. Practice this even if have your family members in the club.
Unless you delegate work to all members you will find that a dedicated few are doing everything. It could be because some might lose interest because they are not feeling involved.
Members may lose interest in club activities. It can be due to a club sticking to the same routine for several years without something new. Take the pulse of your members. Know if they are still excited to be in the club or you all need a field trip or guest speaker to liven things up.
Factor in time
Investment clubs take time. Make sure that you and your fellow members have the time to devote to it and willingly so. If you figure about one to three hours for a monthly meeting and two to four hours of research or work preparing for the meeting, it is three to seven hours that you’ll have to commit each month.
Make sure your sums add up
Make sure that you’re performing your maths correctly. Keep track of your contributions and gains.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.