December 21, 2009

Investment clubs, like anything in the world of investing, require due diligence before deciding whether theyre right for you. Weve taken a look at some investment club tips for your personal situation and covered things to consider when joining an investment club .

Although there are things to watch out for with investment clubs, there are certainly benefits to belonging to one, especially for people just getting started investing. Here are some of the benefits of investment clubs:

Boost Investing Confidence

You may feel safer and more secure learning about the concepts and jargon of the investing world with a small group of people. If youre with people you know you probably wont feel embarrassed asking questions and your confidence will grow as you learn more.

Get Started Investing

If youve always wanted to invest in the stock market but have put it off because youve been worried about losing money due to inexperience, an investment club might help. The people you discuss stocks with and ask questions of can be your mental safety net and sounding board, making it easier to first getting started.

Low Investment Required

If you only have a small amount of money to invest each month, maybe $25 to $50 dollars, then an investment club could get you into the mode of researching, buying, and selling stocks. Of course you could invest that money on your own through a service like ShareBuilder. However, one of the benefits of belonging to an investing club is that the buying power of all the members allows you to participate in and learn from multiple different stock transactions even with a small investment on your part.

Learning from Others

Listening to how other members describe a stock and what ratios they look at when evaluating it can teach you a lot about basic fundamental analysis. Make sure you always ask why when people are explaining the reasoning behind an investing decision. Remember the people in your investment club are likely amateurs just like you so dont take everything they say about investing as the final word on the stock market.

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