The investment club has became an increasingly popular option in recent years as more and more investors are seeking to generate additional wealth for a variety of different reasons such as the generation of additional income, or to supplement their pension. The stock market and investment as a whole is and can be an extremely daunting and intimidating affair and with so many people losing significant amounts of money due to the global credit crunch it is little wonder then that prospective investors are more than a little wary!  The problem is that investment as a process is a rather challenging affair and it has a steep learning curve associated with it meaning that there is little room for failure or foolish decisions.

If you are planning on creating your very own investment club then it is imperative that you give some serious thought before you actually create it in earnest as to what direction it will take and the ethos of it. Will your club be an informal affair where the pursuit of money is more of a secondary concern and with more emphasis placed upon the social aspect of it? Do you wish to attract a series of well-paid and well to do professionals who will have significant amounts of disposable income with which they can safely lose should that worst case scenario be crystallised?

This is a major consideration and one that should not be taken lightly because it will permeate every aspect of the club. For example, if you do want to attract people of a higher income bracket, then you would be strongly advised to ensure that you set a higher membership entry fee at the very beginning in order to attract such members.

How much of the necessary red tape will be managed by the investment club itself and how much of it will be contracted out to other relevant professionals? If you have a qualified accountant and attorney as members of your club, will you rely upon them to fill out the tax returns and keep a record of all of the financial transactions or will this farmed out elsewhere? The IRS takes a very dim view to people who neglect to pay their taxes on time and makes very little distinction between people who were merely negligent, and people who wilfully set out to deceive.

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