Investment club - why and how

Discussion of the proposed Cashback Investment Club

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richard@imutual
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Investment club - why and how

Post by richard@imutual » Thu Jan 09, 2014 1:20 pm

Ok, I've promised to get the idea of an investment club kickstarted again in the new year so let me begin by recapping on why I think this is a good idea for imutual and how I would prefer it to work....

My primary objective is to help attract and retain imutual members by offering a unique payment option i.e. the ability to drip feed your cashback earnings into equity-type investments. By doing so, you have the potential to generate better returns than you would be just putting in a bank or savings account. Of course, there is no guarantee of that and such investments inevitably involve an element of risk. The old adage says "Don't invest what you can't afford to lose" but that's precisely why cashback, which most people tend to treat as a bonus, is an ideal source of funds for investing.

Additional benefits would be:

- To learn more about investing and investment clubs
- To have enjoyable discussions and decision-making with fellow members

The club would be a separate legal entity from imutual PLC, run along similar lines to other UK investment clubs. This means that once your cashback has been paid into the club, imutual PLC has no further responsibility and your funds are under the control of the club in accordance with its rules and members' decisions. On the plus side, that also means your money is safe in the highly unlikely event that imutual PLC runs into financial difficulties.

Given that there is already a "share ownership" element to imutual, it seems reasonable to assume that our members (both current and prospective) would have a greater appetite for an investment club than your average citizen. I know that many of you have already expressed an interest in this when it was first outlined, but I want to be clear that I'm only interested in devoting time and resources to the idea if it works to the overall benefit of imutual. Hopefully all of you will also share that sentiment, so here's how I'd want it to work:

- There is no limit on the total number of members (other than that imposed by law)
- Anyone can join, provided that they create an imutual account and make modest initial and ongoing contributions (see here
- Decisions are made on a one-member one-vote basis regardless of how much each member has invested
- The rules should be set so as to minimise the burden of administration e.g. "meetings" to be held online, each member responsible for providing personal ID directly to the bank/stockbroker.
- It's impractical for such a club to be able to make quick decisions, so the investment strategy should tend to favour medium term "trends" rather than ad hoc "share tips". This is up for discussion of course, but Index trackers and ETFs might be more appropriate than individual stocks
- I'd like to see "member reputations" developed as a key part of the decision-making system i.e. over time, each member can establish a statistical "rating" based on their historical votes and recommendations.
- We should accept that some members will be a lot less active in club discussions than others, and the Club Rules should allow for this to the greatest extent possible (subject to the regulations surrounding investment clubs) - provided that they meet the minimum contributions.
- If a member becomes "inactive" (e.g. not voting/posting/paying in within a given period) or otherwise breaks the club rules, the treasurer will be entitled to close their account and return their funds (minus any admin costs stated in the club rules)
- Members will use the imutual forum to discuss club business and, as far as possible, these will be held on an open forum (in order to help promote both the club and imutual itself)
- I am happy to take one of the three officer roles initially (chairman, secretary, treasurer) but other volunteers will be needed and I don't guarantee to continue in one of these roles indefinitely.

Once up and running, there's nothing to stop more clubs being created - perhaps to cater for those with more adventurous approaches to investing. But I'd prefer our main club to be fairly cautious, easy to administer and to aim for a modest "better than a building society" return.

Hope this doesn't come across too much as me making demands, but I just want to make sure that if we all put in the effort required to get such a club off the ground, it gives the hoped-for boost to imutual with creating an administrative burden. If we run it in the way outlined above, we could really create something huge - the first UK investment club with thousands of active members (the law now allows more than 20). And that would generate some great publicity ;)

Let me know what you think! :)

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Re: Investment club - why and how

Post by garindan » Thu Jan 09, 2014 2:06 pm

As mentioned before - I am happy to take a role and to help get things up and running. Now the Christmas retail period has ended (phew) I have more time on my hands to get something done.

What I feel we need is a small band of, say 10, people that want to be part of the founding members, get the officers sorted out and then be practical and efficient at getting the club into existence. The officers work collectively to get everything set-up, implement an initial club rule set and procedures during a short but productive consultation with the founding members and get everyone registered with their membership and joining deposits. Once this is achieved we could discuss other things like investing the money.....and inviting new members.

Last I left it was that I'd found a pretty suitable share platform for the club but was missing a bank account. Not sure what the requirements of the latter was....

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Re: Investment club - why and how

Post by kevinchess1 » Thu Jan 09, 2014 2:28 pm

Yes i'm inn :?:
As to officers bean kneeded
perhaps eye could be secretarie or sinilaer
How much are we looking at for Monthly investment?
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Re: Investment club - why and how

Post by Squire » Thu Jan 09, 2014 4:08 pm

Thanks go to Richard for all the effort put into this new venture, besides all the work running imutual.

I will not be taking up the offer, but I do think some of the others will welcome this.

Do you need a poll to see how many are in, how many are definitely out, and how many are undecided?

Just to see it if is worth all the preliminary effort that the volunteers will have to put in.

I assume the shares (or the shares share) have to be declared to the Tax Man?
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Re: Investment club - why and how

Post by phil101 » Thu Jan 09, 2014 6:50 pm

count me in. many thanks phil

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Re: Investment club - why and how

Post by parchedpeas » Thu Jan 09, 2014 7:42 pm

I'd be in, using cashback as the finance for it after an initial fee, I suppose.

Can't say I'd be that knowledgeable though, but it'd be fun to learn and play with 'free' money.

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Re: Investment club - why and how

Post by macfamily » Thu Jan 09, 2014 7:49 pm

I'll be happy to be in, as long as the intial deposit's not too high (<£250).

In South Africa, we have something called 'Stokvel', which is a collective savings pool (mainly for christmas) and nearly every bank has an account, that requires 2/3/4 signatures and can be used for collective saving.

The main issue I think you may encounter is getting a bank account, particularly with regards to AML (I've spoken to some of my colleagues at a large UK Bank, and we'd been unlikely to offer you an account due to this reason.)

Good luck and count me in
Last edited by macfamily on Thu Jan 09, 2014 7:57 pm, edited 1 time in total.
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Re: Investment club - why and how

Post by davidlmorgan85 » Thu Jan 09, 2014 7:56 pm

I am happy to also take a role in this - investing is something I have done for years so think I would also have good input to bring to the table along with others

You do tend to pay tax on dividend payment received (Vodafone are good payers)

I am definitely in on this club - Id be happy to throw in £20 month in to the club? How do you all feel with that? I don't want us to have it to high where some members may find months where they may struggle to keep up essentially affecting the clubs pot
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Re: Investment club - why and how

Post by Beachboy » Thu Jan 09, 2014 10:06 pm

As I mentioned previously I am definitely up for this so count me in.

Would be happy with £20 pm mentioned (but also open to any other suggestions).

Thanks Richard for the effort in breathing new life into the idea.

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Re: Investment club - why and how

Post by kevinchess1 » Fri Jan 10, 2014 8:06 am

richard@imutual wrote: e.g. min £50 to start, then at least one contribution of £10 every 3 months
You are having to fund it from your Imutual account and £20 a month every month might be hard for some people

I think £10 a month is more realistic
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