Investment clubs

1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25   

18. The cash account

A club's bank account will show both inflows and outflows:

1. Inflows
   • Monthly subscriptions from members
   • Dividends from investments
   • Interest on cash deposits
   • Cash from shares sold
2. Outflows
   • Purchase of shares

One of the club treasurer's most important tasks is to show all inflows and outflows on a 'cash account' - a kind of ledger - and to reconcile it with the bank statement on a monthly basis. Two principles underlie the cash account:

• every transaction that the club makes is recorded.
• there are two halves, Receipts and Payments, and they must always balance to the bank statement.

Cash accounts can be kept manually, but it's a lot easier to use a spreadsheet. You can also purchase special software from a number of sources. Whichever method is used, the cash account should show the complete trail of transactions with enough clarity to satisfy the club's auditor at the time of the audit.

Click here for an example cash account.

Although the cash account is updated monthly, treasurers don't have to run them from the last day of one month to the last day of the next. It can be easier to end each month on the 28th rather than the actual month-end, leaving the last two or three days to go into the next month. The treasurer can then order the bank statement for, say, the 7th of the month to ensure that they get the correct balance as at the 28th, the end of the accounting month.

1. What is an investment club? 2. A simple explanation of how it works 3. Why join an investment club? 4. Deciding on your aims 5. Joining an existing club 6. Preparing to launch a new investment club 7. The draft constitution and rules 8. Drafting the investment strategy 9. Example of an investment strategy 10. Attracting members to your club 11. Preparing for the inaugural meeting 12. The inaugural meeting - appointment of officers 13. The inaugural meeting - key decisions 14. Things to do after the inaugural meeting 15. Starting the processes 16. Running the first meeting 17. Regular meetings - the key to success 18. The cash account 19. The capital account 20. The asset register 21. The annual general meeting 22. Tax 23. Performance measurement 24. Dealing with a member leaving 25. Conclusion

• ProShare Investment Clubs Looseleaf Manual
• The Motley Fool Guide to Investment Clubs
• The Company of Successful Investors