WHAT ARE INVESTMENT CLUBS?
Investment Clubs are located all over the world, trading in over 50 countries, in 15 languages with up to 22 thousand members learning together, investing a small amount together and planning together, whilst separately trading their own accounts if they so choose. Members learn from the education, the practice and the simulating trading.
Members can trade their own personal account when they are ready to do so. Using the plays of their club helps individuals decide how to trade their own account. This is a highly recommended way of getting started.
Contact us to find out where your nearest club meets or do it online in a virtual club.
HOW DO THE CLUBS OPERATE?
All the clubs will agree to abide by the TICN constitution which outlines the roles and responsibilities of each member and officer. Issues such as the frequency of meetings, monthly contributions, dealing with members who fail to abide by these conditions are covered. Club members will evaluate and select suitable investments and these will then be discussed and voted on at the club meetings. Clubs will then decide on the amount of money to be invested and track the performance of their portfolio.
Four key officers are appointed, Chairperson, Secretary,Treasurer and Trader and vice posts. Each club will have an appointed club co-ordinator to co-ordinate the education and development of each club member.
Clubs will also agree on a common financial goal, and create a financial plan of action to achieve it in an agreed time period. This is usually a minimum of 5 years.
The trading clubs are focused on the short-term volatility of the stock market and are seeking to make an income by buying and selling shares, or other financial instruments, such as options. TICN believes that the first step for our members is to become active in buying shares for the long-term. Then, start short-term trading with a smaller capital sum. If you only want to be a part of a trading club then please Contact TICN to find your nearest one or to join online.
SOME GREAT QUESTIONS ASKED AND ANSWERED:
(1) WHAT TYPE OF LEGAL ENTITY IS IT AND IF IT IS A PARTNERSHIP, DO ALL PARTNERS HAVE EQUAL RIGHTS?
It is a partnership which legally can only have a maximum of 20 members. TICN has 5% and the balance is divided equally between the remaining members.
(2) DEPENDING ON WHAT TYPE OF LEGAL ENTITY IT IS:
How are the securities held? Who’s name are they held in? Who has the rights to move securities? How many authorised signatories are needed to move securities? Who can move cash and how many approvals are needed to move cash etc?
Deposits are initially made into a AIB Bank account and 2 of 3 signatories must sign to move it to the broker account.
DECISIONS TO MAKE A TRADE ARE DONE BY DEMOCRACY AND EXECUTED ONLINE OR BY PHONE.
DECISIONS TO WITHDRAW MONEY ARE DONE BY DEMOCRACY AND EXECUTED – 3 of the members sign to make a trade and then it is confirmed by phone, fax and email by the broker.
Money is moved monthly from the bank account therefore there is never a large balance held in the AIB
(3) OUTSIDE OF THE CLUB MEMBERSHIP (AND SEMINAR), WHAT ARE THE COSTS (BROKERS COSTS, CUSTODIAN COSTS ETC) AND ARE THERE ANY HIDDEN COSTS?
€10 to buy or sell – software is free.
(4) IF SOMEONE (LIKE YOU), CAN BUY INTO THE CLUB – IS THE CLUB / YOUR FUND GOING TO CLOSE AT A CERTAIN POINT.
The reality is, if you are buying in “at cost”, are you buying into a loss if the portfolio is down (so you are actually raising the performance for the others) and likewise, in the future, if the fund is up and someone is buying in “at cost”, does this mean they are eroding your performance? How does this work?
There is a set monthly amount paid by each member every month €100. If we now buy into the club the fact that it has been running for 13 months leaves that we have to in addition to the €100 going forward back pay €1300 to take us up to the same level as the current members. This can be done by increasing our initial €100 to €200 for a number of months to catch up. The valuation is based on the valuation of the fund on the day of joining and you are due an equal share of this on the day.
(5) WHAT HAPPENS IF THE CLUB / GROUP WANTS TO END? HOW MANY PEOPLE DECIDE?
The agreement is that the club will run for 5 years. After that it is to be reviewed. Otherwise see number (9)
(6) IS THERE PROOF OF OWNERSHIP AND % OF OWNERSHIP AT ANY POINT IN TIME, SHOULD YOU EVER NEED TO PROVE YOUR ASSETS TO A BANK ETC?
Yes there is a partnership agreement
(7) ARE DIVIDENDS PAID BACK INTO THE CLUB OR ARE THEY REINVESTED INTO THE FUND?
At present they are reinvested but once the fund reaches a certain level dividends will be paid
(8) IS IT JUST THE ONE BROKER USED AND ARE THERE ANY LINKS WITH THE BROKER(S) AND THE FOUNDING MEMBERS (IS THERE ANY SOFT COMMISSIONS / UNDER THE TABLE AGREEMENTS IN PLACE ALSO)
Back Office is run by Apex Clearing Agents
Intermediary is Octagon in Dublin (in business since 1994)
Broker is TrackData – used to trade on the Nasdaq – in business since 1981
(9) WHO MAKES DECISIONS FOR THE CLUB ON ITEMS LIKE CORPORATE ACTIONS WHERE A DECISION IS NEEDED?
(10) WHO IS THE BROKER OR WHO IS HOLDING THE SECURITIES? WHAT DUE DILIGENCE WAS DONE ON THEM BEFORE THE CLUB CHOSE TO USE THEM? IS THERE ANY COMMON MEMBERS / DIRECTORS OF ANYONE RELATED TO THE CLUB AND TO THE BROKER? THIS IS KEY.
No affiliation or common members/directors. Octagon are Central Bank Regulated Intermediary
(11) IF THE BROKER OR CUSTODIAN ARE VERY SMALL, WHO ARE THEIR AUDITORS (YOU WILL WANT TO SEE A BIG 4 FIRM HERE OR ELSE A SET OF FINANCIALS FOR THE BROKER / CUSTODIAN)
APEX AUDITORS are Ernest and Young
(12) IS THERE A LEGAL ADVISOR TO THE FUND SHOULD ANY MEMBER BRING A CASE AGAINST THE REST OF THE MEMBERS – HOW ARE THESE COSTS ALLOCATED?
FIND COPY OF CLUB CONSTITUTION http://www.ticn.com/TICN/about/club_constitution.asp
Partnership so no Legal Entity.
(13) HOW OFTEN WILL YOU BE TOLD OF THE SECURITIES HOLDINGS AND CASH HOLDINGS (SO YOU CAN CHECK THE VALUES YOURSELF!)
We will have full access to the information and can check it daily.
(14) ARE THERE ANY TAX CONSEQUENCES FOR YOU TO WORRY ABOUT? DOES THE CLUB MANAGE ALL THE TAX AFFAIRS OF THE FUND / INVESTMENT AND YOU ONLY HAVE TO WORRY ABOUT CAPITAL GAINS? ARE THERE GOING TO BE ANNUAL DISTRIBUTIONS PAID ON THE INVESTMENT AND IF SO, ARE THEY WITHHOLDING TAX?
If main source of income then applicable for Income Tax – otherwise capital gain tax but as we are investing in US this need not be declared for 7 years (back tax payable for every year though)
WHAT TO DO IF INTERESTED IN LEARNING MORE
We have a range of options depending on your requirements. A good start would be to purchase one of TICN books in our store or contact us today for an invitation to one of our investment club meetings in your local area where you can meet some of our members and we can answer any questions you may have. There is no obligation to join and we have clubs throughout Ireland.
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