Investment club

From Wikipedia, the free encyclopedia

This article may require cleanup to meet Wikipedia's quality standards.
Please discuss this issue on the talk page or replace this tag with a more specific message.
This article has been tagged since June 2006.

The examples and perspective in this article or section may not represent a worldwide view of the subject.
Please improve this article or discuss the issue on the talk page.

An investment club is a group of individuals who meet on a regular basis for the purpose of investing money.

The invested sums can be as little as $10 a month. The first investment club on record dates back to the 1800s in Western America. Various online communities devoted to this type of investing have recently emerged and have contributed to the personal investing boom in the United States. One of the reasons that people come together in investment clubs is to learn how to invest. While investment clubs are commonly organized with members contributing money and investing as a group in a single club portfolio, members of other self-directed investment clubs simply meet and learn about investing but invest on their own. With the advent of computers and the internet investment clubs have also moved into cyberspace.

Investment clubs are generally formed as general partnerships, but could also be formed as limited liability companies or limited liability partnerships (in states that allow them). While an investment club could incorporate, the double tax treatment on corporate distributions makes the corporate structure less desirable than a partnership. Typically, a general partnership does not generate any tax liability on its own; instead, any tax liability is passed through to members each year. Investment club partnerships must file Form 1065 and Schedule K-1s with the IRS each year, and with states that require partnership filings. Investment club accounting software can facilitate the management of a club's books and the preparation of tax filings.

Investment clubs that focus on education can be a great vehicle for beginning investors. Clubs offer the structure and support that many people need to get started investing, and clubs make it possible to get into the market without a big initial investment, another incentive for new investors.