‘The Money Club’ Authors Speak To FutureNestEgg.com

By FutureNestEgg | September 15, 2008

Almost ten years ago 3 women (Dianne, Emily and Di) who met regularly at a book club decided to learn more about investing in stock market. They decided to form a stock market investment club. They invited others to join in. Frances, their fourth founding member joined in. They read books, met regularly, discussed about this topic and learned a lot from each other.

Their investment club is called ‘Sheba Investment Network’. Soon their knowledge about stock markets started to pay off – they were making money. The word was out. People wanted to find out how they could start a similar investment club. In 2001, the four members decided to write a book about investment clubs. The book is called ‘The Money Club’ and it became a bestseller. In 2007 they released an updated and revised version of ‘The Money Club’.

Sheba Investment Network today makes a return of between 25 and 30%. Not bad. They could probably give the professional analysts a run for their money.

I had an opportunity to interview these remarkable women. Here is what I found out about them:

What is a ‘money club’ and how did you get the idea to start one?

A money club is a group of likeminded people who want to learn about share investing in a fun, low risk environment. The members decide how to run the club, where and how often they meet, and how much money they will contribute.

Our club started as a book club – we decided we could have just as much fun in an investment club, with the bonus of learning and making money as well!

To have a successful partnership like you guys have, can you tell us a couple of key things a club needs to do right from the start?

It’s very important to have a written agreement before you start contributing any money. You should agree on how much money you will put in, your investment time frame, and your attitude to risk. Basically get it sorted out up front and in writing.

Can you tell us a bit about your book – ‘The Money Club’?

We wrote the book because when we started our club, there was nothing on the market to give us a step by step guide on what we should be doing. We wanted others to benefit from our experience. The book goes through all the steps you need to take to get your club established and start investing. We have also developed a Money Club kit, (www.themoneyclub.com.au) with more detailed forms and templates and a partnership agreement you can print out and copy.

Is having experience in the financial industry essential to become members of a club? For a beginner in stock market investing, researching stocks can sound very daunting. Is it really that daunting?

And can you share with us a tip or two about how one can research stocks (not technical aspects but just some processes one can follow)?

Financial industry experience is definitely not required – when we started our club only a couple of us had ever owned shares and we really didn’t know very much about investing at all. We did feel it was daunting, and the fantastic thing about being in a club was that pooling our resources and learning together made the whole experience so much easier than trying to do it alone.

We chose stocks to research mainly through our general knowledge or experience – for example we might know someone who has worked for a company, or be a customer, or have read about the company in the newspaper. Once you’ve found a company you’re interested in, there is a wealth of information available, especially online through sites such as comsec.com.au.

A lot of industry experts struggle to get the returns you have been getting. What do you think sets you apart?

Over the years we’ve steered away from hot tips” – we’ve taken a more pragmatic, research based approach in targeting companies with good earnings and sound management.

Also we don’t have the constraints industry experts have like fund managers, so we are able to be responsive to the market.

To learn more about these women visit their website – The Money Club.