Woes Of A Dream Carrier

I hit the send button and sigh deeply.

That’s me emailing the members of an investment club I’ve chaired for the last 3 years (and still continue to chair despite having resigned over a year ago).

Investment clubs have been touted as a fantastic way to pool your savings and invest as a path to financial freedom, especially after the success of the Transcentury story.

When one starts out in the saving journey, they can afford to save very little, and it’s easy to get discouraged especially when the dream is bigger than you. How to grow Kshs 3,000 a month into the house you want, or capital to start your business when you eventually retire? Pooling funds together helps you meet your goals but also, keeps the money away from your day to day concerns.

Just to give an example, my club has 10 members, we started by contributing Kshs 2,000 a month, then increased it to Kshs 3,000, now we’re at Kshs 5,000 a month. The most amazing thing is that over time, without realising it, you build this pool of investments you wouldn’t otherwise have done on your own.

Has it been all smooth? No, and that’s what this post is about. What can I share about running an investment club? There are no brainers like you should all have a common vision, it’s best to have at least 10 members in your club, transparency in decision making and all. What irritates about leading an investment club?

At the beginning it’s fantasic. The monthly meetings are well attended, everyone is up to date with their contributions and members generally take interest in the activities of the club. However, as time progresses, other things distract, may be it’s taking too long to get rich and you find that one or two people are running the club.

The market is down, most members feel the club made the wrong decision investing in the stock exchange, you feel they need to update their contributions so you can even out your purchases before the market recovers.

You call for meetings and you’re only the two of you. The accounts reveal that only 5 out of 10 members are up to date in their contributions. What do you do as a leader?

• Lock – in clauses. Clubs are formed for the long term. It’s important that your club’s constitution discourages exit by members. You could have a clause that locks in members for 5 years, and any member that wishes to exit would have to get someone to buy them out to avoid capital leakage within the club.This may not appear very important at the beginning when everyone is gung ho about the club, but as time progresses, you realise it’s importance.
• Form a sub committee. When you started the club, you had a vision. You can’t carry this vision alone, can’t make decisions on your own. Select two or three members who you can communicate with constantly, before running decisions by the other club members.
• Lead by example. Keep your contributions up to date. That gives you moral authority to harrass the rest of the club.
• Communicate. Even if the club no longer meets, keep talking about the vision and updating members on their investments. Celebrate victories (even by email) when your asset base grows.
• Don’t get discouraged. In my opinion, an investment club shouldn’t have a vision shorter than 10 years, especially if you’re contributing small amounts monthly. You’re the vision carrier, keep going.

Are you part of an investment club? How has it been? Lets share experiences in the comments section.