Investment Groups

Hi, I am looking at starting an investment group aimed mainly at women who work part-time or stay at home to trade CFD's. I have been learning about this process over the past 6 months and have been 'practice' trading without real money and doing research and online courses to learn how to read charts, recognise trends etc in preparation of real time trading.

Is anyone interested in joining a women's investment group with only a small investment, if so email me at rmmoore@iprimus.com.au and I will provide full details of my proposal and how I think it should work.

Alternatively, does anyone have any stories, suggestions or traps about investment clubs and suggestions for how to make the most of them and how best to run them I would be most appreciative of any assistance as this is my first time for such an endeavour.

gobzilla

Hi Gobzilla

Why do you want to do your investing in a group? Is it just because your pooled funds will allow you to invest in wider spread of companies? I can't think of any other reason why you wouldn't prefer to just make your own decisions. Or perhaps you have a sort of social aspect in mind?

Julia

Thanks for the reply, my reasons are a little of both, pooling funds would allow a greater investment capability as my current capability would not allow any profits of note as I could trade on my own but with low captial input would take a long time to realise profits that are useful.

Also, I am really interested in the idea of having a pool of people to provide ideas, many different viewpoints, others can sometimes see pitfalls that you don't and opportunities that you don't. I am especially keen to also have members to discuss decisions with, both for a sort of social environment similar to these forums as I have been 'practice trading' for 6 months and find it can be a little lonley doing it alone.

gobzilla

There are several good books about share clubs, if you do a search on google under share clubs then you should find something.
I have this bookmarked as they were featured in a book I read ages ago
LIPS

Be warned though, ASIC have a strict policy on how these clubs operate so you should make sure everything is above board, especially in regard to being classsed a managed investment fund!

Thanks for the suggestions

gobzilla said:

...aimed mainly at women who work part-time or stay at home to *trade* CFD's.

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gobzilla said:

...pooling funds would allow a greater *investment* capability as my current capability would not allow any profits of note as I could trade on my own but with low captial input would take a long time to realise profits that are useful.

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so you want to pool funds AND leverage it with CFDs? eek! The topic says 'investment groups' but then you talk about trading. Which is it....trading or investing?

A share club is a good idea, but only if you do as bvb says and get a book on the subject. Forget the CFDs part. Nothing says 'legal nightmares' quite like a share club losing money on CFDs.

Besides, self funded instalment warrants make a simpler and less risky leveraged investment.

Gobzilla,

Have you had any "takers" so far from your suggestion? Other than ASF, what avenues have you tried? Is there a particular reason you are looking for women only?

Have you had any actual experience trading shares on the ASX with real money? I would suggest that it might be a bit unrealistic to expect people who have no idea who you are other than a nickname on an internet site to send you money to invest, especially when you say in your PM "there would be times that it would be necessary for you to make decisions about an investment without consulting other members of the group" or words to that effect. You have undoubtedly noticed the thousands of people who have withdrawn their super money from managed super investments and turned those funds into a Self Managed Super Fund basically because of dissatisfaction regarding the returns achieved on their behalf by the PROFESSIONAL FUND MANAGERS. I guess potential investors would want some pretty good reasons why they should place more trust in your decisions than they have offered to professional fund managers.

What thoughts have you had about how the actual investments would be carried out in a practical sense, ie what broker? How would you envisage the banking would happen? Whose signatures would be on the account? What signatures would be required to effect payment of contracts etc?

Julia

Thanks Julia

I have been trading with CMC Group for over 6 months, with some success, again becuase I have only a small deposit my sucess has not been as large as I would like, but enough to make me realised the benefits of CFD's.

You are correct in saying that it is a big ask for people to trust a stranger who is just a nickname. For those interested in my proposal would have my full name, home address, telephone number, work details and any other information required to be able to find me if they have concerns. I have also considered that once there is enough of a response I would discuss issues like joint accounts, there would be some practical difficulties with this however if it gives them members comfort I am happy to make this arrnagement if we could find a group member who would have access to a fax and time to be available. I have done plenty of research and have complete ideas on how this would work, have even drafted a monthly statement setup that could be provided to members to show all profits and losses.

I realise that my statement 'there are times when I would need to make decisions..." seems possibly scary, but this is a comment made in worst case scenario. My intention is to not make any decisions wihtout consulting the group but realistically there may be times a position needs to be closed to avoid losing profits or risk unnecessary losses in which we do not have time to consult everyone. I would always act in the best interests of the group becuase any losses they incur I would also incur.

With respect to trading, the service I am using is not a full service broker, just a trading platform with low fees and I do all the trading myself, this would be a bit difficult to share I imagine so the members would have to trust me with this part of the trading, but my intention would be to send notification of all transactions the instant they are made (and most would be one discussed prior to making them.)

I realise that my proposal may sound unfinished and not thought out but I assure you that I have thought this out thoroughly and would have answers to most questions you could ask me. Any interested members would have the right to ask full questions and I would answer these immediatly, also, any issues that are raised that I had not considered could be discussed and I would look at solutions by research immediately.

Thanks for your query

Who pays the tax? If its in your name.
Dividends?
Dont know if you have one but you should have a Proceedures Manual made up that explains every case scenario How you enter how you set stops how you exit how you handle funds how you handle Margin calls how you handle drawdowns Tax,Dividends,Profit,Loss,Position sizing,Funding,distribution of profits,the withdrawl of members,the inclusion of new members,costs of running the club,Starting capital etc etc.

Have EVERYONE sign it who wishes to be involved--that way no arguements and its in writing.

I also ask as Julia has.
Why do you want to be involved in a club?
If the club makes 20%P/A so do you why not do it without all the hassell on your own.
You'll find you'll have a room full of experts who know very little otherwise they'd be doing it themselves as well!!


I agree in this instance with Tree---EEEEEK!

Thanks tech, I do have a procedures manaul basically which sets out tax implications, profit distribution, how we will make decisions about trades and the mechanics of each trade, I also have set out more detailed information for those who choose to join the group covering all those issues you have addressed. As I have noted I have been trading for 6 months so I am very aware of what I need to address. I have not included dividends mainly becuase my proposal to trade CFD it would not really ever be an issue and I avoid share dividend with CFD unless I am looking at long term trades becuase this is a risky proposition with CFD day trading you can lose lots of money on the day the shares go ex-dividend, however I could inlcude this in my manual so that if it did arise once in a blue moon it could be addressed. Yes I have already noted to any interested members privately, provided them with my basic outline manual, a more indepth one is available once they decide to join, I have also noted to anyone expressing an interest that I intend to have an informal contract prepared and each member will sign same.

I have also considered the withdrawal of members and inclusion of new members and have this included in my detailed document.

Costs of running the club, start up capital and most of these I have addressed, along with the tax implications.

I agree that most likely it would be less hassle to trade on my own and I have been doing this. One of the reasons I looked at this is becuase my own capital is limited and I felt that there are propably others out there with the same problem. I also felt that I have been doing ok over the last 6 months and wanted to share this with others who are like me, I like the idea of helping other people with limited income to find an extra source of spending money as there have been times when my profits have allowed me to get some little extras that I could not afford otherwise.

Over the last 6 months I have had to focus on only small price trades and there have been many times I can see a possible profit on larger priced shares but do not have the capital, for eg I wanted to get into BHP when they were in the $18 range as I looked at the expert predictions and the charts, company reports etc and felt that they could easily go into the $20 range and would have made a lovely profit on them, but could not afford the margin required to trade.

So these are some of my reasons.

Also, I realise that to those of you who see my post feel that I am a bit wishy washy, and not fully prepared for this. I assure you I have considered all avenues and have made notes and provided a 'manual' about how I belive all situations should be dealt with. Some of my procedures are either in a proper manual format, notes for myself to develop or in my head yet to be written but still reaonsably complete in their terms and just waiting for me to add to my 'manual'.

I would suggest that it might be a bit unrealistic to expect people who have no idea who you are other than a nickname on an internet site to send you money to invest, especially when you say in your PM "there would be times that it would be necessary for you to make decisions about an investment without consulting other members of the group"

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For a share club to work that would be a no no, in terms of the actual members but more importantly, ASIC would class you as a managed investment and you would require a licence for that and comply with all other aspects of being a managed investment.

Not worth the trouble I'd say especially with compliance issues!

bv

Think thats the clincher.