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What is an Investment Club?
An investment club can be a term used for a group that organizes itself for the purpose of pooling investment dollars and participating in the market, or for a group that meets for informational and educational purposes.
Clubs that actually invest sometimes organize themselves as LLCs and establish a system for how to choose and manage their investments as a group. Even though “investment club” may sound like an informal and relatively unregulated way to invest with pooled assets, they are actually subject to regulation by the SEC.
When clubs form into entities and the percentage of interest that each partner owns is potentially available for sale, or some of the partners are passive investors who are not actively involved in the selection and management of the investment portfolio, then the membership shares will be deemed securities, and the operation will be subject to SEC regulations.
The club may also be considered an investment company, per the Investment Company Act of 1940, if it has more than 100 members, or offers interest in the club’s investments to the general public. Private placement falls under Regulation D and is exempt from SEC regulation.
Investment clubs can be organized as LLCs, which allows taxes for gains or losses to pass through to the investors. The club also might establish a trust and trustee to give the club a layer of design and protection that they believe will be beneficial.
How can I invest in hedge funds?
Some hedge funds will require investors to fit the Qualified Purchaser criteria, which requires a portfolio of $5 million
How Does a 401(k) Work?
Employees can either become participants in a 401(k) by voluntary enrollment or by automatic enrollment with opt-out
What is Dividend Per Share?
Dividend payments are allocated on a per-share basis. The company issuing them may announce the dividend in terms of...
What is the foreign earned income exclusion?
Americans working abroad often enjoy a few tax advantages. One of which is the Foreign Earned Income Exclusion
What is market exposure?
Market exposure is the degree to which an investor is participating in the risks and returns of the market as a whole
Do I Need a more Specialized Financial Advisor?
Some advisors have practices that focus on specific types of investments or niche markets
What are Net Tangible Assets?
Net Tangible Assets represent a company’s total amount of physical assets less its intangible assets
What is the Interbank Rate?
The interbank rate is the average lending rate used between banks of similar size when they borrow money from each other
What is an Alternative Trading System (ATS)?
The financial markets are continuously evolving, with new platforms and trading mechanisms emerging to better serve investors and traders.
How old should my portfolio manager Be?
Generally speaking, it’s a good idea to choose a manager who has experienced various market cycles. Younger advisors...