Investment clubs

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13. The inaugural meeting - key decisions

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.

• Timescale

  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.

• Subscription amount

  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.

• Frequency of meetings

  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.

• Location of 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?

• Choice of bank

  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.

• Choice of stockbroker

  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)

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