Do you want to start investing, but don’t know where to start? A private investment club can offer a solution. This way you learn about investing and invest together. How does that actually work? And what are the pros and cons?
They actually think an investment club sounds dusty, says 24-year-old Claire Post. She is a board member of Dutchess Capital, an investment club for women.
“We prefer to call it a immersive investment program, with which you learn about financial markets in ten sessions. For example, how you open an investment account, but also what a broker (exchange trader, ed.) does,” says Post.
The club has been around for about three years now and the members meet every month. “The founders noticed that there was no place for a young woman to learn about investing. It is soon seen as a man’s world. With our club we are changing that.”
A joint portfolio and joint investment
During a meeting, the women work on their joint portfolio. Members may pitch interesting stocks. “You learn to delve into a stock and exchange that knowledge with each other.” The group votes democratically on the purchase and sale of a share. “With a majority, we choose that share.”
“Affinity with financial markets is a plus, but you learn the rest here.”
Mandy Erkelens, co-director of Dutchess Capital
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You don’t have to be an experienced investor to participate, says co-director Mandy Erkelens (24). “Affinity with financial markets is a plus, but you learn the rest here.” Once at the club you pay a one-time 200 euro deposit. “To promote inclusivity, a grant is available for the investment. After one year you can choose to continue investing passively in the fund.”
Both Post and Erkelens think that many women find it exciting to open an investment account on their own. “It feels safer if you do this in a group. In addition, it is a good exercise. “After a year, almost everyone has opened their own investment account.” The group now has a portfolio of 15,000 euros. But what if you stop with the club “Then you get your investment and any return that you have made,” says Erkelens.
Dutchess Capital investment club during a meeting.
Dutchess Capital investment club during a meeting. Photo: Dutchess Capital
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Advantages and disadvantages of an investment club
There are currently about two hundred private investment clubs in the Netherlands, says Joost Schmets. He is a spokesperson for the Vereniging van Effectenbeleggers (VEB). “Friends, family, students or colleagues are in a club and then invest from one portfolio.” According to him, the rules are different for each company. “You agree together how much you invest. It is often not about large amounts. There is a relaxed atmosphere to learn about investing. That is paramount.”
But there are also risks with investment clubs. “You can lose your investment if the price drops. In addition, emotions can lead to wrong choices.” Schmets does think that a club can help remove some risks. “Together you know more than alone. Talking to each other helps and can remove emotions.”
“You can’t just start a club with a joint game. You have to register with the Chamber of Commerce, among other things.”
Joost Schmets, spokesperson at the VEB
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Yet it will be more and more difficult start an investment club. “You can’t just start a club with a joint game. You have to register with the Chamber of Commerce, among other things. The main reasons are the stricter regulations and legal obligations. With this, banks try to prevent possible money laundering. We see the number of clubs therefore deteriorate. Informal groups drop out faster. They are not waiting for all the red tape and rules.”
Investing for the long term
The 35-year-old Niek Overkamp knows the stricter rules. In 2017 he founded the investment study club Patel with acquaintances. “In addition to registering with the Chamber of Commerce, we had everything recorded by a notary. It is a great idea for such a club, but with money you never know for sure.” The group consists of thirteen men who see each other once a month. “That is the only time we buy or sell shares. Afterwards we have a drink, because it is also about having fun.”
“You build up a lot of knowledge together. You come into contact with companies you have never heard of.”
Niek Overkamp, Investment Study Club Patel
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Patel is all about learning to invest. “You build up a lot of knowledge together. You come into contact with companies you’ve never heard of.” Each member contributes 1,000 euros annually. “That is our maximum investment and we are strict about that.” When members quit, they get one-thirteenth of the current value of the portfolio.
According to Overkamp, many ideas for shares are proposed, but only 25 percent get the majority of the votes. “For me, that is an advantage of an investment club. You see yourself through rose-colored glasses more quickly, now you have a sounding board. This ensures that you stay sharp.” As far as he’s concerned, Patel is meant for the long term. “You never stop learning and it’s cool to do this together.”
