- Investment

Investment Clubs

Investment clubs have been around for a long period of time. People who think alike have always gathered to put their resources together and start something new. However in recent years the investment clubs have become more and more popular. This is due to the fact that the people have become more and more interested in investing and making some extra wealth to themselves. The concept of the investment club is fairly simple. A group of people gather together and pitch in certain amount of capital. The total capital collected will be invested in diverse fields and the profits are distributed equally amongst the members of the club.

What are the benefits of these clubs?

1. It allows individuals who do not have sufficient capital to invest in diverse fields. Many people who are capable of investing in small amounts benefit a lot from investing clubs. This allows to safeguard the interest of a group of people who are interested in investing but do not have sufficient resources.

2. It is also beneficial for those who do not have sufficient time to sit around and research as to which company is better for investment. Investment clubs allows people to invest money and sit back as the club makes the investment.

3. The most important use of these club is minimizing your loss. Investing in diverse fields will always minimize your lose. You need to understand that by investing largely in one sector or one company might increase the risk of loss, however if were to invest in diverse field then the risk of losing all your investment is minimized by a great extent. These clubs allows you to channel your resource into multiple fields.

However some individuals might find the investment clubs a bit too stuffy for their taste. The demerits of investment clubs are:

1. It dose not allow your creativity. The club follows a certain set of rules which has to be agreed by majority of its members. If you are risk taker and would like to invest heavily in one sector this might not be possible in investment club as they would like to invest in low risk sectors in a very conservative way.

2. The fees for joining an investment club might be very high for certain individuals. This is perhaps the most common problem faced by small scale investors. The investment club requires a fixed capital to be invested by all members and the amount of capital might vary depending on the experience of the club and the members in the club.