An investment club is a group of individuals who meet for the purpose of raising money and investment; members usually meet regularly to make investment decisions as a group through voting and minute recording, or gather information and conduct investment transactions outside the group. In the US the upper limit for the investment club's value is $ 25 million. There is no lower limit. Investment clubs provide the means to learn about markets, meet and work with people who share the same interests.
Video Investment club
History
Although people have invested in groups for thousands of years, the world's first investment club was allegedly founded in Texas in 1898 during the Wild West when some investments were considered safe. Investment clubs are seen as the ideal way to spread risk - far from cattle.
While the club's first investment on record dates back to the 1800s in West America, various online communities devoted to this type of investment have recently emerged and have contributed to a boom in private investment in the United States. One of the reasons people gather at investment clubs is to learn how to invest. In the UK investment clubs took off in the 1950s, but the rate of formation fell during the financial crisis of 2008.
Maps Investment club
Starting an Investment Club
Industry observers recommend that potential members comply with these guidelines:
- Consult a tax advisor about the tax implications of the club's chosen legal structure
- Form missions, policies, and investment goals that enable active participation before investing
- Create a written operation agreement or membership that includes asset management rules and membership changes
- Evaluate costs for various tools and platforms to maximize returns.
- Focus on learning and making money.
Club Type
High School Extracurricular Investment Club
This form of investment club usually meets to develop an interest in investing and the ins and outs of investing for minors, usually high school students. They are usually led by adults who have extensive experience in professional investment.
These clubs are groups of people who collect their money to buy stocks, stock options, mutual funds or bonds. Many clubs are educational with goals in line with learning how to make smart long-term investments. The National Association of Investors Corporation is a nonprofit organization of many investment clubs with this aim. These clubs may decide to buy or sell an investment usually based on a majority vote.
The club's objectives are varied and in the US the Securities and Exchange Commission may require that the club be registered depending on the purpose of the investment. The SEC distinguishes between clubs based on several laws including the Securities Act of 1933 and the Investment Companies Act of 1940, which relates to whether the club issues a membership interest that is effectively a security.
Club members and members are usually not required to hold a securities license as long as they refrain from seeking compensation in return for financial advice or soliciting the sale of shares, mutual funds or bonds in third party companies. One notable exception is that the CEO/President or CFO of Company C are allowed to request shares or bonds in their company as long as they provide a law-abiding personal placement memorandum to their new shareholders. One additional requirement is that an unaccredited investor should be a Director of C Corporation other than as a shareholder.
Real Estate Investment Club
This type of club is most often published as a group or a real estate investment company, rather than a club. The legal difference according to the SEC is to have 100 members or less. In fact, real estate investment groups typically have more than 100 investors. These clubs usually buy real estate or records (loans from licensed third parties) to benefit from: cash flow, asset appreciation, instant equity, tax benefits from eligible deductions or dividends, group purchasing power, monthly compounding or daily, higher liquidity and risk diversification. Real estate transactions are limited to 35 participants to meet the legal requirements of many countries because they are closely held, and can be legally governed as individual ownership transferring assets to groups of life confidence, limited liability companies, limited liability partnerships, general partnerships or corporate C.
Business Investment Club
These clubs are often called incubators and are formed to buy businesses that generate cash flow and equity. This type of investment ranges from a group of people who buy low risk franchises with at least two years of significant income and positive cash flow such as major fast food franchises, gas stations and hotels for high-risk businesses with no earnings history such as start-up, discovery, or patent development and prototype products.
Hybrid Investment Club
The hybrid club is a combination of two or more of the above investment club types. Typically, real estate investment clubs have a lower risk and provide a higher return of 21% to 70% of stocks, mutual funds or bond investment clubs due to the ongoing needs for housing and population growth. Business investment clubs have the same risk when compared to stock clubs, mutual funds, or bond investments. However, business investment clubs have some additional benefits that include significantly higher returns and lower operating costs as measured by net income per year divided by the amount of cash needed to buy a business. In addition, you can also hire yourself or family members to work in business as an employee.
Doing business
To operate an investment club, the business should be done in a rather regular manner. The level of formality will vary based on club type. A typical club will have an informal communication channel through mailing lists, Twitter accounts or message boards. In addition to informal communication channels, investment clubs should set up formal communication channels to do business. Usually, this is done with monthly meetings. A typical meeting agenda will cover all the normal activities you would expect in an organization with elected officials. The typical meeting agenda:
- Play call
- Old business - unfinished business list from previous meeting.
- Summary of votes - Summary of all decisions selected from previous meeting
- Presentation of NAV - NAV or Net Asset Value Clubs will show the value of each club member on paper.
- Available funds - fund presentations Available for investing.
- Presentation of current research - each member assigned to present the investment option will present the research.
- Choosing to withhold or invest - Voting for holding cash, selling current assets, or investing in one investment option
- Investment sound - The last vote on an investment strategy that sets the exact amount to be invested and the strategy for carrying out the investment.
- Other businesses - Typically, other businesses will include the need for proxy voting or other day-to-day business operations needs. It could also include options to change the brokerage house, or discussions about the opponent's risk.
- Formal closing
Legal structure
English
Investment clubs are usually unrelated associations. Member contributions are converted into 'units' whose value rises and falls in accordance with the value of the underlying investment. The clubs are not taxed corporately, and their members must be individually accountable for their share of the profits and benefits of their capital.
AS
Investment clubs are generally formed as general partnerships, but can also be established as limited liability companies, limited liability partnerships, corporations, or sole proprietors who transfer real estate assets to group life beliefs (similar to family trust). While investment clubs may combine, multiple tax treatments on corporate distributions make corporate structures less desirable than partnerships except in cases where C Corporation pays a qualifying dividend after deducting fees. Typically, public partnerships do not generate any tax liability; instead, any tax liability is passed to members every year. However, income taxes are generally much higher than taxes on qualified dividends.
India
Investment clubs are generally formed as Global Safety Summit & amp; Club of India, but also can be formed as a limited liability company,
To understand the legal structure that an investment club must choose, the club must first understand the type of club. Each different club type will have different legal requirements as well as different reporting requirements. Typically, the SEC only requires reporting for investment groups with more than 100 members, reclassified as investment groups, not investment clubs. Publicly held offers such as Real Estate Investment Trusts known as REIT also have additional reporting requirements.
Tax implications
Investment club accounting software can facilitate the management of club books and the preparation of tax filings.
In the United States, investment club partnerships may have to file Form 1065 and Schedule K-1 with the IRS each year, and with States requiring partnership submission.
In British investment clubs and members are required to submit a form 185 (new) to HMRC each year.
See also
- List of financial topics
- National Association of Investors Corporation (also known as NAIC and BetterInvesting)
- Voleo has developed mobile and web apps for investment clubs. See Voleo SimuTrader for simulator or Voleo for direct trade (US residents only).
External links
- Investment club and SEC A FAQ at investment club provided by SEC
- Stories from over 100 investment clubs about their experience
- Proshare, UK promotional agency for investment club
Further reading
- Investment Club for Dummies by Douglas Gerlach and Angele McQuade (ISBNÃ, 0-7645-5409-3), published in 2001
References
Source of the article : Wikipedia
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