How to start an investment club?

11th Nov '21 by Revs8

13 comments 1055 reads

Hi all,

I can’t find a thread on a similar topic so starting this one.

I have several friends who are at a similar stage in life to me and are asking me about investing in small cap stocks (I’ve told them about the wealth of knowledge in this community). Not all of them are confident to go it alone investing. Especially in small cap stocks.

I’m thinking that we might like to start a local investment club (based around knowledge from Stockopedia). I searched online and found a few tips (such as make it fun and educational).

I’m pretty sure that there will be many people in the Stockopedia community who will have good advice to give when starting a club. I’m particularly keen that people with modest contributions can feel equally valued as those with much larger wallets, whilst being financially fair to all.

Please feel free to post any constructive tips here. I await your thoughts/guidance.

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gmtrader

12th Nov '21

Rules and guidelines. Make sure you use some that you can all agree on. Might be a good idea to try out for a year a fantasy portfolio. Everyone has different ideas and hopes, so make sure everyone agrees or your likely to loose friends. I wish you all the best.

gus 1065

You’ve probably already found it, but if not take a look at this article from the SIC blog here on Stocko. (The rest of the regular blog is a useful resource too).

https://www.stockopedia.com/co....

It’s a review of their first year and includes some good ideas on how to set up a club and identifies some of the initial teething problems. Read both the article and the discussion thread below as there is some helpful stuff in there, in particular Paul Scott’s experience from his long-standing Investment Club and recommendation of some (cheap) software http://www.ivaluation.co.uk/ that will deal with the accounting/ unitisation/ individual tax receipts etc..

I think the key thing is to make sure everyone in the club only commits at the outset time and money that they are prepared to offer (and worst case lose!) without undermining the friendships that brought you together in the first place. When he fun stops, Stop! (As a famous bookie once strap lined).

Best of luck,

Gus.

Edward Croft

Great you are doing this... it does seem that the world is conspiring against investment clubs... the govt is doing nothing to tax incentivise it (all the tax perks going to individual investing accounts), regulatory overhead is also crippling the ability to start them.

We use Interactive Investor - who have historically supported investment clubs. They still show the forms for adding/removing new members which you can find here. https://www.ii.co.uk/useful-fo.... I would talk to them directly about getting a brokerage account. I believe iDealing are supporting clubs. https://www.idealing.com/en/he...

There's a bigger issue around the bank account - you have to have a bank account for investment clubs. You'd need a Community Bank Account. We're trying to shift our account at the moment from HSBC due to some issues with them, but have found it almost impossible to set up a club account elsewhere. Almost all banks stopped taking community account applications in the pandemic but also they are increasingly saying no to "for profit" community accounts. We're about to try Metro Bank https://www.metrobankonline.co...

The old information resource at ProShareClubs is still up and running .. I know Digital Look bought it about 15+ years ago... but it's kind of been mothballed - http://www.proshareclubs.co.uk... - but there's good intel there.

Revs8

Thanks, Ed, gus1065 and gmtrader for all the useful comments. The bank accounts sounds like a tricky issue. We could try paper trading for education and fun to start with if working bank account is a problem.

Could the club set up a company with a bank accounts and shares or is that simply too onerous from a regulatory point of view?

ChattyChimp

13th Nov '21

Are you sure you need to run your investment club with community money? Can't people invest their own money and you all come together to share ideas, research and strategy. I know I find having someone with a shared interest to talk to is a great help in organising my thoughts and helping me deal with the ups and downs.

Kevin Holloway

14th Nov '21

I ran a large club with 25 members back in the 90s. It was good fun at first but people soon lose interest leaving a core of members keeping it going. The accounting isn't that complicated, same as unit trusts. I'd echo the other comments here about a signed agreement for all members. I also think the advantages of tax wrappers like isas or sipps make a big difference which may make it better to run it as a shared interest club and use personal investment accounts rather than pooling the money.

Danny001

10th Dec '21

Please take a look at www.signet.org.uk we are the national network of investor groups.

With SIGnet, we don't group invest. We believe in 'constructive disagreement'. With a share club, it is the opposite, everyone has to agree. When looking at a share, sometimes, half of the group will be tasked with being the bear, whilst the other half is the bull. We want to avoid confirmation bias, we want the truth, we want to discuss and debate.

The intention is positive.

Investing is huge with many many different styles and influences. Some like dividends, others growth etc etc. We have location groups which, covid permitting meet physically. We also have style groups with national reach which meet online.

11th Dec '21

SIGnet Liverpool meets on Saturday 18th December 10am - 12pm. Whilst still using the name Liverpool, it is now very much a style based group. Covid pushed it online and now it has a broad reach of investors predominantly interested in AIM.

SIGnet Membership Application Form (sharesoc.org)

If you then wish to create a group of your own, I would be happy to assist.

KevinS1

Hi Danny.

Is there a Signet group in the Glasgow area?

12th Dec '21

Hi Kevin, we have an online group for Edinburgh although it reaches much further. You would be very welcome to join. The next meeting is scheduled for;

Thursday 27th January 2022

5.30pm - 7.30pm

We also have national groups and other zoom groups. If you would like me to look at structuring a Glasgow Group, I am happy to do that.

Thanks Danny - can I contact you through the Signet website?

Yes, if you fill in the membership form, I then get contacted and from there, I will send you an email and we can make things happen.

How to start an investment club?

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Revs8

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