“All of our members are really interested in learning,” Munson says. “We all take an active role.” Munson, the club’s treasurer, tells me that Way North assiduously follows the National Association of Investors guidelines for how to select stocks and evaluate companies. Stocks that grow steadily at a rate higher than inflation, and those with a low amount of debt as a percentage capital, fit the guidelines for purchasing.

Way North automatically deducts investment contributions from members’ checking or savings accounts, including a sum to cover BetterInvesting dues (the club subscribes to online tools on a yearly basis), the club’s annual taxes, and incidentals.

One important point: An investment club won’t make you rich. After 10 years of returns and monthly contributions of $50 per member, Way North’s account is up to almost $85,000. Split that 10 ways, and it’s not going to fund your retirement.

Over the years, Way North has hit a number of home runs, but it also has had some losses. By resisting the urge to take quick, short-term profits, the club has weathered the ups and downs of the market. A club like that puts your feet to the pedals and forces you to muscle that bike up the hills when the going gets tough. And that’s a good thing.

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BetterInvesting's Guidelines for Starting an Investment Club $$ Choose members who are committed to long-term investing.  $$ Designate a club president, vice president, secretary, and treasurer as soon as possible. Elect officers for one- or two-year terms.  $$ Have all club members sign a general partnership agreement that establishes the purpose, objective, and structure of the club.  $$ Determine operating procedures, such as rules and regulations, officer duties, and meeting times.  $$ Submit Internal Revenue Service form SS-4 to apply for an employer identification number. An investment club is a business entity, therefore you’ll also need to fill out a “certificate of conducting business as partners” form. The club will also have to file an annual tax return.  $$ Open a checking account, a brokerage account, or both, so that your club is ready to buy stocks.


Investment Quest

Interested in starting an investment club, but don’t know where to start? Check out these online resources:

$$ fool.com/investmentclub
Get Motley Fool’s refreshing take on starting a club and the pitfalls to avoid. 


$$ better-investing.org
The how-to articles and online research tools here are helpful even for the greenest beginner.  


$$ sec.gov/investor
Under “Publications” click on “Investment Clubs” for the skinny from the Securities and Exchange Commission on the regulatory aspects of investment clubs.

—Katie Harholdt