Learn How Investment Clubs Can Prevent Debt And Save you Money

There are many people today who are interested in investing in the stock market. They are fully aware of the advantages that investments can provide as a vehicle for long term savings. They also realize that the sooner money is invested, the more funds they will be able to accumulate over a long period of time and the less chance they will have of accruing large amounts of debt later in life. However, many of these individuals are novices who are hesitant to hire the services of a financial professional because the costs for expert advice can be quite prohibitive. If these people choose to go it alone, they often feel that they are in over their heads. It can be quite overwhelming for a beginning investor to determine where to begin. In addition, making knowledgeable investments may require more time than he is willing or able to contribute. A great solution for many people is join (or start) an investment club.

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An investment club is a group of individuals (usually friends or acquaintances) who pool their resources together for investment purposes. These groups meet on a regular basis to discuss investment alternatives and determine where the money should be placed. Generally, members are assigned research to perform on particular investment possibilities. During the meetings they report their findings to the group. This enables the members to benefit from a wide range of research, but they only have to perform a fraction of the work. Often times the groups may include individuals who already possess a certain level of investing knowledge which they can share with the other members.

Typically, members of an investment club commit to investing a nominal fixed amount of money each month. These pooled resources are able to generate higher levels of savings than would be possible if invested individually. In addition, these clubs have often averaged a higher rate of return than investors who are non members.

If one person invested $40 per month for a full year the total would be $480. (excluding interest) If this money was saved for 30 years with an average rate of return of 11% the grand total would be $8,924.

If, however, that same person joined a group with 14 other people and they each placed in $40 per month, then the first years total would reach $7,200. If the money was saved for 30 years with an average rate of return of 12% then the grand total would be $182,591. If you divided this figure amongst the group, each member would receive $12,172.43. In this example the individual would gain over $3200 by investing with the club for a single year. Over the course of a long period of time this could significantly increase the long term savings and decrease the likelihood that an individual will accrue excessive debts.

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About the author:

Mark Carney is a professional consultant with First American Debt Consolidation and Loans, a debt consolidation service specializing in financial education, credit counseling, and debt management services nationwide.