INVESTMENT CLUBS TEACH NEW INVESTORS ABOUT STOCK MARKET … AND THEY MAKE MONEY TOO!
 

• Research shows clubs sharing risk and profiting with FTSE 250 and AIM stocks

• The longer clubs stay together the better the profits

• Nine in ten investment clubs profitable over last 12 months

• Seven in ten people join for the sociable nature of investment clubs

New research by The Share Centre shows investment clubs offering private investors a way to share risk and make returns outside of the FTSE 100. The findings show the longer they have been together the more risks they take and the greater their returns.

The research also reveals that investment club members see their clubs as an ideal way to invest, splitting the stock market risks with their friends: over a third (35%) of members say they feel more comfortable taking a chance if it’s with the support of other people.

Sharing risk and combining knowledge, expertise and fact-finding, allows 84% of club members to be more adventurous and invest outside the more familiar FTSE 100 market. Nine in ten clubs that have been together for three years or more invest outside the FTSE 100. Furthermore, the most popular market for those that have made gains in 2006 was the FTSE 250, found in 37% of club portfolios. In general, nearly a quarter of investment clubs invest in AIM (Alternative Investment Market which lists smaller companies).

Far from finding analysis of bulls and bears market trends a lonely task, 70% of investors surveyed said they joined clubs for the sociable nature of membership. Furthermore, almost two-thirds (64%) of all profitable clubs gain their investment inspiration from a pint or meal by having their regular team meetings at their local pub or restaurant.

Several heads can be better than one. Sharing ideas with other members allowed nine in ten clubs (88%) to make a profit in the past year and clubs members say the longer they have been together the more confidence they have. This means they are prepared to invest more widely and the greater the risks they take, the greater their returns have been.

The longer you are together the better your returns. The most successful clubs - those with 21% plus return on their investment last year – have been together over three years.

Clubs with six to ten members are the most successful performers with half those clubs achieving returns over 21%. Investment clubs really are a team game, with more than eight in ten clubs (81%) involving at least three-quarters of all their members in investment decisions. 

Guy Knight, Sales & Marketing Director at The Share Centre, comments:

“Investment clubs are a great way to introduce people to investing. By joining in a club the risk of investing in the stock market is shared. Investment clubs have been active in the UK since the early 90’s, so have lived through the highs and lows of the market, actively investing throughout these changing times – and making money too.

“Our research shows that even though you are investing with other members you still have a lot of influence over how your money is invested, with the majority of club members very active in all investment decisions. The fact that nine in ten clubs made a profit last year shows the benefit of members pooling their shared knowledge to take on the market.”

Almost half (46%) of investment clubs are named after their local area or where the club first met. Furthermore, what investors call their club can have a bearing on its financial performance. Of the 8% of clubs who gave their club an optimistic name all have seen their investments increase by at least 11%, with six of these clubs enjoying turns of 21% or more.

About The Share Centre

The Share Centre was established in 1990 to provide value-for-money share services for private investors. Its range of services includes buying and selling shares (by Internet, telephone and post), a comprehensive share administration and safe custody service, free investment advice on UK shares quoted on the London Stock Exchange, and tax-efficient investment ‘wrappers’ including ISAs, PEPs, CTFs and SIPPs.

The Share Centre’s Advice Team provides comment on market sectors and individual shares, including all of the post-privatisation / demutualization companies, on www.share.com.  Access is available to customers and registered users of the site. Registration is free.

For more details phone 0800 800 008
Website: www.lansons.com
 

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