investment club

Definition

A group of retail investors who pool some of their money and make joint investments. Investment clubs attempt to enable individuals to become individual investors by pooling their funds in small groups and collectively deciding how to invest the money. Like-minded investors come together to make investments based upon the input and research of the entire group, often providing a more complete foundation for subsequent decisions. Of course, members of investment clubs do not need to invest only through the club, so the club can make an excellent addition to a portfolio or it can serve as an excellent introduction to investing as an individual.
Clubs can be a benefit to investors of all skill and experience levels. It can be difficult to gain a spot in an existing club without connections or the opportunity to replace a departing member. Fortunately, starting a new club is as simple as finding a dozen or so people in one geographic area who want to participate. Members should plan to, and may be required to, contribute at least a certain amount to the club's investment budget at certain intervals. Some clubs allow members to exceed the minimum and others do not. All investments should be researched as carefully as an individual would research them, but, because more people are involved, research can be more thorough and cover more investment opportunities.
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NAIC National Association of Investors Corporation