Financial Freedom? Try Investment Club

In my last article on savings, I emphasize cultivating the discipline first, no matter how small your income. I also suggested you ensure it is deducted before you receive your payment and many other pieces of advice basically to take control of your personal finance. You can read the article in details here; 

SavingsWill Not Take You There, But Get You Started

I understand how difficult it is to discipline oneself not just in times of money, even our health which is very paramount. But, when you are finding it difficult to self-determine to plan towards achieving your financial dream, one of the best options is to join an investment club or rather create one with people of like minds among friends, family, and neighbours.


Let me assumed you never hear the term ‘investment club” before but as the name indicate, it is a financial concept of 2 or more people coming together to achieve their dream of financial independence by contributing an agreed sum of money regularly and on a weekly or monthly interval to put it in a money generating activities, assets or instruments.


Benefits of Investment Club

First, the investment club makes it easy to cultivate savings culture when you realize you can start earning an extra income, although not for immediate consumption. It also instigates you to compete towards a rewarding course making savings and investment fun instead of strenuous.


Personally, it may take some months or up to a year or more to save enough that you can channel into investment. With the investment club, this period is drastically reduced depends on the activities, assets, or investment you agreed to go into. In some cases, it could be immediately, I mean with your first contribution or less than a month depends on the number of members, or the sum contributed. This way, your money starts working immediately.


With an investment club, your journey towards becoming informed investors will begin earlier than expected. And you could in a short time learn about money management, entrepreneurship, business management and many more with professional knowledge about an industry or more. The reason is that; one major benefit of the investment club is learning, which is expected to be part of your weekly or monthly programme.


An investment club is a good concept to create lucrative jobs for members. Instead of working in an underpaid job, you could start an investment club to start a small business. By the time the business started picking up. Members could take over the leading roles which also allow the business to grow faster.


You may lose more than enough to try an error in the process of investing your hard-earned savings or pay so much in expert advice with little to show for it. With the investment club, the adage of “two good head is better than one” is one of the benefits; Decision making requires members brainstorming, and when face challenge there will be the team to weather the storm together.


There are more benefits to an investment club. But the chief aim is to achieve financial freedom. As a result, apart from any member receiving a salary if managing the club business, you should avoid taking out anything from the business until you achieve the ultimate goal.


Forming an Investment Club

If you are well convinced of the concepts and benefits of the investment club and you cannot find one or a suitable one around you, the best option is not to give up but to create one yourself. You may need further information or help but the following should be handy enough to get you started;


Coming Together of Like Minds: Talk to relatives, friends, and neighbours who will buy the ideology of the investment club. Preferable, put it together in a printing form and give it to them to digest after talking to them.


It is not compulsory if none of you know about the stock market, Gold, Oil, real estate investment, or starting a business, etc. You will learn gradually from a good broker and by inviting professionals in the field of your interest to educate you regularly.


Preliminary Meeting: If possible schedule an introductory meeting as part of the information available on your printed materials were all interested party will dialogue and agreed on modus operandi (mode of operation) which may include club name, type of business to start with and to venture into in the future, meeting days and time, amount to invest weekly or monthly by members, etc.


Legal Structure: You will need to consult an attorney, accountant, and tax expert to determine the legal structure and tax implication of the form of investment club you are to register with the Corporate Affairs Commission (CAC) and other necessary financial bodies. If possible, you could register the club separately and that of the business you are going into separately.


Appoint or Elect the Executives: Someone has to lead, you need to select or elect executives among you who should include; President/Chairman, General Secretary, Financial Secretary, Treasurer, etc


It is also important to have some committee to work with the executives. For example, the Education Committee to find experts and materials to educate the members during meetings, Investment Committee to research on investment interested by members, and many more.


In most cases, all members have a role to play in the investment club, most especially when it comes to researching investment which is a good way to learn how to invest as the major aspect of being part of the club.


Social or No Social: You also have to agree on the level of social activities that will be taking place after the club meeting, quarterly, biannually, or annually since we all believe that “all work no play make Jack a dull boy”.


Usually, an investment club is characterized with regular monthly investment contribution and any member who fails to pay at due date is liable for an additional percentage as a fine. This is meant to discipline members towards achieving the set goal which is the major aspect of achieving the state of financial freedom. Although not advisable, you can choose to go flexible, given members the opportunity to invest above or below a specific amount, but this will not help the majority of the members.


An irregular member might be forced to withdraw their investment both in time of attending monthly meetings which should include training and in terms of meeting up with their monthly contribution. Members can choose to voluntarily withdraw after notifying the club is written at the right time as agreed upon. Members can also transfer their investment and membership to another person subject to approval by the majority of the members.


Before I end this, be aware that starting an investment club could be challenging. You need just one more person to commence while you keep looking for other people who share your view.

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