A group of people who meet regularly and pool their funds to invest in securities. In many instances, a club is formed as much for social and educational reasons as for making profits. Since most investment clubs are formed as partnerships, their dividends, realized capital gains, and losses are passed through for tax reporting by the individual members.
Investment clubs offer many benefits with few drawbacks.
The individual investor joins with a group of peers to invest in stocks and other securities. The monthly meetings create a comfortable social setting to help the individual stay focused on investment goals. Members are usually required to contribute a minimum amount each month to the investment pool as well as commit time to do investment research. And the clubs' financial returns are often very successful. The National Association of Investors Corporation in Royal Oak, MI, offers guidance to new clubs on how to get started.