DOUGLAS GERLACH'S
Investment-Clubs.com

Checklist for Starting an Investment Club
by Doug Gerlach • PUBLISHED December 4, 2000

f you have decided to give the investment club concept a tryout, here are the steps you need to take in order to get your club up and running. We have provided plenty of helpful links to stories on Investorama and other web resources to help you in your quest. Good luck!

Prior to First Planning Meeting

     Item   Understand the basics of investment clubs and how they work.
     Item   Buy a copy of Starting and Running a Profitable Investment Club.
     Item   Get acquainted with the National Association of Investors Corporation (NAIC). You can request information and brochures to be sent to you in the mail, but all their printed material is available free on their web site. You might consider setting up a club membership right now in your name to get the ball rolling.
     Item   Contact your local chapter of NAIC; attend a chapter meeting or model club meeting.
     Item   Understand how club accounting works, and why the unit value system is best.
     Item   Understand what tax returns a club must file.
     Item   Determine which organizational structure is best for your club. Your club could form as a general partnership or limited liability corporation, for instance. Most clubs will stick with the tried and true method of partnership.
     Item   Prepare a draft partnership agreement & bylaws.
     Item   Create a private Investorama Member Group to track your portfolio and communicate with members.
     Item   Schedule your first planning meeting.
     Item   Recruit 10-20 potential members to attend the planning meetings. Distribute copies of our article, "So you want to start an investment club?", to people.
     Item   Visit Investorama's Investment Club Message Board to ask any other questions you may have.

First Planning Meeting

     Item   Keep it fun! Nobody wants to sit through two hours of lectures, so try to keep an element of humor in your meeting planning.
     Item   Provide snacks. People think better on a full stomach.
     Item   Review the final version of your partnership agreement and/or bylaws.
     Item   Come up with prospective names for your club. Many clubs like to have fun names, like the "Blue Chip Posse" or the "Stockettes."
     Item   Explain to members how club accounting and the unit value based system works; consider purchase of NAIC Club Accounting Software.
     Item   Determine your club's investment approach; make sure all club members agree on the approach.
     Item   Review NAIC's Stock Selection Guide and their suggested long-term approach to buying growth stocks.
     Item   Elect officers.
     Item   Record all member contact information, including email addresses (Secretary).
     Item   Adopt regular meeting time, date, and place (or mechanism for how locations are set)
     Item   Set monthly contribution amount
     Item   Discuss banking and online brokerage options; have Club Treasurer investigate for next meeting.
     Item   Establish expectations of members.
     Item   Schedule second planning meeting.

Second Planning Meeting

     Item   Adopt club name.
     Item   Adopt and sign partnership agreement and/or bylaws.
     Item   Club Treasurer reports on NAIC Club Accounting Software; authorize purchase.
     Item   Club Treasurer reports on banking and brokerage accounts; choose a bank and/or broker.
     Item   Vice-President sets the club's educational program.
     Item   President sets agenda for next meeting.

Following Second Planning Meeting

     Item   Club Treasurer applies for a Tax ID number (officially called the "Employer ID Number," or EIN) from the IRS.
     Item   Make business filing (also known as a "DBA" or business certificate) at local county clerk's office; make partnership filing with state office, if required.
     Item   Purchase NAIC Club Accounting Software.
     Item   Join NAIC (or add members to existing club membership, if you've already joined).
     Item   Avoid common pitfalls as your club gets off the ground.