What is an Investment Club?

Investment clubs today hold a total of more than $175 billion worth of equities in their portfolios -- rivaling the largest mutual funds. Each month investment clubs add more than $50 million. This is big business.

What is an Investment Club? Investment clubs have been around for decades, and tens of thousands exist in America today. They've been growing in popularity in recent years. Members of investment clubs, often groups of friends or co-workers, typically meet once a month to discuss companies and make decisions about which stocks to buy and sell. At meetings they each contribute a small sum of money that is deposited in a joint account. Members take turns researching and reporting on promising companies in which they might invest or companies in which the club is already invested.

The National Association of Investors Corp. (NAIC), established in 1951, has set forth guidelines for running successful investment clubs. It urges members to:

* Invest money regularly, regardless of market conditions
* Reinvest all dividends and capital gains
* Buy stock in companies that are growing faster than most of their peers
* Diversify investments, not putting all the communal eggs into one basket