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Online Share Trading

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Investment Clubs

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sasa
Regular Contributor
We are looking at starting up a small investment club at the office, ~R150k initial capital. Does anybody have a good agreement that we could use between the participants, or any other advice for me? (What to do / not to do etc). Thanx
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20 REPLIES 20
kwagga
Super Contributor
Watch out for tax implications on the responsible trading entity.
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john_1
Super Contributor
start smaller and have recuring captial inputs..
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nala
Super Contributor
I know of a investment club someone belong to . He ended up doing all the work and the rest just sat and watched . How active are the members going to be . Another thing I picked up was that there was an accountant on board which seemed cool . But he was not there to check the books voluntarilly so it was sort of better for the club to have employed some out of the club to check oo the books. There is a cost to it but it will add professinalism to the club and objectivity to the club and longer term sutainability.Another thing I picked it became a kind of social club in the end. What conclusion i arrived was that it may been better for them just bought some unit trust and let someone do the managing. Not to put a dampner on the idea i suggest you get few committed individuals .Maybe 3
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3JN2
Frequent Contributor
What are the advantages of an investment club? Saving trading costs? What else?
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Lindsay_1
Contributor
I belong to an Investment Club using the SPA mechanical trading system. Brilliant - works like a bomb. Usually invstment clubs don't work and the members fall out as there is always arguments about what to buy and when to sell. Using SPA there is no argument as you simply trade on the signals. The books are audited once a year and the club pays the costs. Standard Bank provides the monthly statements and year end stuff so no problem at all.
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coops
Occasional Contributor
Hi Lindsay, I am interesed in joining such a club ? Do you know of any looking for extra investors. email me on [email protected] if you do. Thanks
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Invinsible
Contributor
Hi all, does anyone know how to go about this with standard bank. There is a social club that i belong to and we want to start investing in shares as a club. We already have an account with standard bank (normal savings) but have no idea how a trading account is handled for a club. Advises please??
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Lindsay_1
Contributor
Invinsible - if you give me your mail address I will send you a copy of the Investment Club Agreement that Standard Bank were happy with. Each member has to sign and initial each page and send it together with the required FICA documents to Standard Bank - they will tell you what they want. You then just open an On Line Trading account and take it from there.
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Invinsible
Contributor
Thanks Lindsay, pls forward it to this email: [email protected]
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DR_1
Super Contributor
on the upside everyone smiles, be careful of the down side.
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Not applicable
I am a member of just such a "club" - its just we keep it simple & limit liability by each member having their own OST account. What we do is to trade info between us. My focus is slightly different from the other 4 & each member brings their own investment flavour. So we get together, compare notes, debate strategy & attempt to explain why we are investing in a certain share. Then its up to each member to do his / her own thing. Its amazing how each of us have a different perspective & investment analysis even of the same stocks. We manage the investments for 5 other passive investors using their passwords on OST to trade after getting a written sign off to do so. Slightly more cumbersome but again limits the tantrums etc. We charge 1% of all net growth, after losses, dividends & share price increases on a quarterly basis. That way the passives get to pay to play. Then the social side really kicks in with plenty of liquid refreshments & general chat after the serious side is over. Never "meet" for longer than 60mins - only discuss major movers & shakers - that way we dont get bored or thirsty :)
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In answer to your original question, each is contributing 150k, that is a sizeable amount - and any dispute arising will be a high court matter (I think more than R30k takes it to the high court). That will be a very very long and expensive process to resolve (read years!). So I would definitely suggest looking into a lawyer drafting a contract for you. Disputes will arise when someone commits the capital to an investment that goes south, so you can bank on something going wrong at some point. Don't mess about - get a lawyer, that is my advise.
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