Pros and cons of investing through a group

Most of us would like to invest in the stock exchange. Wouldn't it be great to sit back and watch as our wealth grows? How do those big shots on the New York Stock Exchange do it? Sometimes it seems like they just sit back and watch their money grow and grow. It is obviously not that simple, but even if we had the know how to make it on the stock exchange, how could we find the money to invest? This is one thing that most of us simply do not have. There is no way to possibly break into the market if we do not have the capitol to do so. So are we forever to be kept out of the world of the rich and famous. Maybe. But then again there is something called an investment group or money club that could help you gain the capitol you need to invest.

An investment group or money club is an interesting and innovative idea. Because the average person does not have the wealth to invest in the market you will need the help of someone who has more money. While even one of your friends might not have the wealth to invest, all of your friends put together might have enough money to make a good investment. With your combined wealth you can approach a major broker or company and make an investment. If that large investment pays off you migth all get a nice slice.

Another benefit of forming one of these groups is that there will inevitably be members who know more than you do about investing. One of your friends might know about a particular company or product that would be good to invest in. You might also know an actual broker who could give you some good advice.

However, there are certain problems associated with investment groups. One serious problem is that while you might have invested large sums of money in the group, you will not have control over the decisions the group makes. Your vote is just one of many. If the group makes a bad decision with your money you loose it. While you migth gain more capitol, and investment group will invariably lead to less control. If you are the sort of person who needs control over their money, an investment group might not be the thing for you. There is also a problem with the amount of time the group could require to make a decision about an investment. It always takes a large group longer to make a decision than a single individual. Good investment opportunities might slip right by you as the group deliberates over what to do. This is especially problematic in the stock market, where decisions have to be made immediatley.

Another problem is that some members of the group might do much more than others. If you do most of the work to reasearch and investment and aggresively pursue it, you might not get any larger portion of the profit than the person who simply invests some capitol. If you participate in an investment group make sure to outline what the responsibilities of various members should be. If you are shouldering much of the load you should be given more profits than someone who simply plops down some money. The key to a good investment group is the key to almost any club. Responsibility needs to be deligated appropriately. The worst case scenario would be that the group looses money and that friends are offended.