fbpx

What Not To Do In The Investment Club Industry.

2. Continue without a Constitution. The Investment Club Constitution is a written agreement or contract with your members. Most clubs operate under a general partnership agreement, establishing the Club’s purpose, objectives and structure. The constitution should include guidelines stipulating how the Club will be run; dealing with issues like club membership, recruitment and resignation; leadership structure which defines member roles such as president, treasurer, and secretary. The constitution should also establish a code of conduct and must map out the scope of each member’s financial responsibility.

3. Make decisions without developing an Investment strategy. Aside from the written partnership agreement, members must come to a conclusion about an investing strategy and how much time will be dedicated to meetings. Clubs may meet quarterly, monthly or every fortnight depending on the level of involvement they have in making decisions, and how far along they are in the process of Saving and Investment.

4. Think short term. A long-term buy and hold philosophy has proved to be the best approach for the majority of clubs whose goal is to build wealth. For example, in the Ugandan Capital Market, our trading platform is not as fast as those in developed economies, so this buy and hold strategy is pretty much your only course of action. Besides, our market is very illiquid so you would not be able to get in and out of a position so quickly in the first place. Therefore, Investment Clubs must decide on a goal and remain faithful to this even in the long term to see the best results. The Club may diversify its interests in time as long as it does not lose sight of the reason the members came together in the first place.

5. Disregard the benefits of forming a legal entity/ becoming an incorporated company. This status is preferable because: it allows owners to separate and protect their assets; the liabilities of a company cannot be attached to personal liabilities. Moreover, attaching Inc. or LLC. to your business instantly legitimises it and adds credibility to the investors as formidable Industry players. There also is tax flexibility since an LLC is taxed at the same rate as a sole proprietorship.

6. Get lax about maintaining accounting records: this is at the core of the Club, keeping tabs on how much money is coming in or going out, who is entitled to what and whether or not the accounts reflect the wisdom in investment decisions. Smaller Investment Clubs may not be able to afford professional bookkeeping and so will rely on the skill and integrity of the treasurer. However, as soon as outsourcing this function of the Club’s administration can be afforded, it should be enlisted. Bookkeeping software like what Kanzu Banking offers is the most efficient way to track the finances of an Investment Club.

Share this post.

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn

Related posts

Problem With Money - Kanzu Code

The Biggest Problem With Money And How to Fix it.

One does not have to search too far to realize the complications that come with money—having, or having none of it—having too much or too little of it. How to get it, keep it, use it or share it. It seems that there is no end to the problems you will have once money is […]

Save a little at a time - Kanzu Code

9 Things We All Hate About Savings.

Saving is a very familiar concept to most of us, whether or not we have mastered this discipline. The reasoning behind it is simple, consume less in the present to have more to consume in the future. But bearing this idea of ‘delayed gratification’ in mind, it is no surprise that many people struggle to […]

Investment Clubs -Kanzu Code

The 9 Most Misunderstood Facts about Investment Clubs.

According to the Uganda Investment Authority, an Investment Club is a group of fewer than 100 people who pool their money to invest in ventures they deem profitable. A clear enough definition, wouldn’t you say? Still, there is a lack of ample conversation surrounding how exactly these organizations are run, or how they can benefit […]

Problem With Money - Kanzu Code

The Biggest Problem With Money And How to Fix it.

One does not have to search too far to realize the complications that come with money—having, or having none of it—having too much or too little of it. How to get it, keep it, use it or share it. It seems that there is no end to the problems you will have once money is […]

Save a little at a time - Kanzu Code

9 Things We All Hate About Savings.

Saving is a very familiar concept to most of us, whether or not we have mastered this discipline. The reasoning behind it is simple, consume less in the present to have more to consume in the future. But bearing this idea of ‘delayed gratification’ in mind, it is no surprise that many people struggle to […]

Why Hate Investment Clubs? - Kanzu Code

10 Undeniable Reasons People Hate Investment Clubs.

The idea of Investment Clubs is still shrouded in a lot of mystery for many people, with a good number of them wrongly believing that Investment Clubs are bound to fail.  Individuals who remain sceptical about the advantages of participating in group Investments fall into two categories.  They are either ignorant about the obvious benefits […]

Microfinance Industry - Kanzu Code

What Is Holding Back The Microfinance Industry?

The Microfinance Transparency report from 2011, lauded Uganda as the most vibrant microfinance industry in Africa. Yet, despite this success in Uganda as well as many other African nations, poverty levels within the population would indicate that the job to ensure economic inclusion is far from over.  Microfinance institutions are organizations that provide loans to low-income […]