10 Undeniable Reasons People Hate Investment Clubs.
3. Only a select few people are aware of the capacity of bookkeeping software. Those that aren’t aware remain sceptical about the process of giving their hard-earned money to something without the promise of proper accountability. The Kanzu Banking model is a perfect solution for Investment Clubs because it offers them auditable records, tracks cash flow, and calculates how profits are shared amongst the group. It also has a feature that allows Investment Club members to get loans and make deposits directly using mobile money.
4. Some people believe that an Investment Club cannot be appropriately managed. This bias exists because they underestimate the effectiveness of the Investment Club’s constitution. However, it single-handedly streamlines the processes within the Club, providing recourse on conflict resolution, and penalizes defaulting members. It does this by answering fundamental questions concerning the vision, expectations and leadership structure of the Investment Club in its formative stages. The power of the constitution lies in how much the members of the Club respect it.
5. Investment Clubs are built on trust, and trust can be a difficult thing to foster in contexts like these which deal with money. This distrust manifests as the desire to micromanage members in their roles or even taking on their responsibilities. This mode of operation will create resentment within the group, and fracture relationships because while one person feels overwhelmed, another will feel overlooked. Invest Club members need to be able to count on their partners to be just as invested in the success of the Club as they are.
6. They are unprepared for the risk that comes with being amateur investors. People like this prefer to invest solely on the recommendation of industry experts and do not understand the requirement of club members to get an education for themselves. However, the benefits of an investment club come with a caveat: the returns or losses that the Club realizes entirely depend upon club members and their ability to choose the right investments for their pooled funds. Members have to be able to bear the responsibility of being the final decision-makers.
7. In many Investment Clubs, one cannot leave the Club at will and still get their share of the profit. Many Investment Clubs will allow their members to leave the Club if they feel like they must, but if it is a premature departure, they will not be able to take their share of the profits with them. They will be entitled to their initial contribution towards the Investment, but none of the dividends. Some people might view this as unfair, yet it is enforced to protect the Club.
8. Some Investment clubs do not have a clear vision in place and inevitably fail, which does not inspire any confidence in the model. Every Club needs a strategy on what types of Investment they will get involved in, as well as a contingency plan to ensure the continuity of the Club even when certain investments do not pan out. A clear vision and well thought out strategy will also protect the Club from buying into the ‘latest trends’ in Investment, which could turn out to be bad bets.
9. Investment Clubs do not offer any immediate returns. If one is looking to make a sizable amount of money immediately, Investment Clubs will not be the way to go. It takes a while for a Club to become operational, besides there aren’t many investment options that turn a profit that quickly. More so, returns that the members are entitled to are not made available initially, because reinvestment is always a high priority for any Investment Club, particularly the ones just starting. However, it is important to remember, that investing as an individual will most likely be an even longer wait before one can get sizable and consistent returns on their Investments.
10. Finally, the most substantial opposition to Investment Clubs will come from people that have been victims of fraud in the past. I know of a man living in Kisugu who started a Club and ran it as Chairperson. After the members had saved enough to begin Investing, the treasurer made off with all the pooled money. As Chairperson, none of the members believed that he was not part of the scam and held him responsible for their losses, which he is still paying off. Understandably, he does not have any nice things left to say about Savings and Investment Organizations.