The inaugural meeting of a club is always an exciting first step. It is also the meeting where a number of key decisions should be made.
As a rule, members of a club should be able to withdraw their money whenever they want. It is a good idea, though, for members to agree that they will participate for a minimum period - say, 12 months, - if only to get a degree of commitment and give the club a chance to get airborne.
Some clubs are set up to run indefinitely with an understanding that members are expected to be in the club for at least three to five years. Others have a fixed timescale of, say, five years and set a strategy to sell out at that time.
Almost all clubs agree a monthly subscription, and it is advisable to set a minimum and maximum amount. Some clubs set a minimum as low as £25 with a maximum not much higher. Others set a higher minimum, say £50, and allow members to contribute up to £400 - 500 per month. There is no 'right' amount. It depends on what members can afford and how much they want to commit.
A lot of clubs meet on a monthly basis to discuss their portfolio, make buying and selling decisions, and consider changes to the strategy. Clubs that meet less frequently - say, quarterly - should give one person or a sub-committee the power to make investment decisions between meetings.
Clubs hold their meetings in a variety of places - member's houses, clubhouses, community centres, workplaces and pubs. It is worth giving some thought to this before you start - will all members (and their spouses) be happy to have the entire club back to their house?
An important decision, and one which is becoming more complex as the traditional High Street banks have now been joined by online banks, telephone banks and other financial institutions keen to look after your money.
Most clubs use execution-only brokers, for the simple reason that members want to make investment decisions themselves, and there's no point paying more in commission than you have to.
Commission charges are an important factor in choosing a broker, but you should also consider other aspects of their service:
- how can you place orders (phone, online, post)
- how often do they send statements and valuations out, and how many members are they willing to send them to?
- are there any extra administration charges?
- do they provide extra offline services free of charge (e.g. free newsletters or magazines, copies of company accounts, attendance at shareholders' meetings, automatic reinvestment of dividends)
- do they provided extra online services free of charge (e.g. share prices and news feeds)
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