Clubs help members invest in financial futures
The Beardstown Ladies are legendary.
A group of 16 women, all in their 70s, banded together in the early 1980s after the women's group to which they belonged started to slide in membership. Interested in learning how to invest, the women met to talk finances, investing and how manage their money.
They soon decided to put their collective experience — and finances — together and formed the investment club. Their initial meeting room had 16 spots around the table, the club's last two remaining charter members — Carnell Korsmeyer and Ann Corley — told NPR Illinois' Vanessa Ferguson.
It was, they told the reporter, a practical number that allowed them to have enough money to pool their resources but small enough for easy decision-making. The club started small, each member contributing an initial investment of $100 and then $25 per month. To learn how to invest, the club joined the National Association of Investors Corporation and followed the organization's guidelines for starting and running an investment club.
What followed was the stuff of legends — both the good and the bad.
The club's members became international celebrities as a trio of books published in the 1990s, which quickly garnered attention and acclaim. Their practical, common-sense advice caught the public's attention as the investment club made investing on a personal level seem both accessible and possible.
Do your homework. Buy what you know. Start small, be consistent. Prioritize education, learn about investing and don't be afraid to ask questions.
In the NPR interview, Korsmeyer and Corley said the club started small, each contributing an initial investment of $100 and then $25 per month.
According to a Wikipedia article on the investment club, the members claimed annual returns of 23.4% since inception in their books. However, an audit by Price Waterhouse determined a computer formula error resulted in inaccurate published returns. Instead, the professional services network company determined the club's annual returns was closer to 9.1%.
However, in the NPR interview, the rate of return was eventually updated in the late 1990s to 15.3% — according to some analysis, better than the broader market in the 15-year period that was analyzed.
The club's advice was practical and straightforward.
• Focus on companies and products that you know, whether the market is high or low.
• Start small and be consistent; the combination, over time, allows for steady growth.
• Emphasize education and learning; dive into learning about investing.
• Diversify, diversify, diversity; like location, the club members told interviews that they learned that some investments will do well, some with perform as expected and others will underperform. Diversification evens out the highs and the lows, to a degree.
• Remain patient and stay the course; a consistent investment strategy is far more important — and more likely to generate success than trying to time the market, Korsmeyer and Corley told the NPR interviewer.
• Reinvest dividends and profits. The TLDR version: don't spend dividends and profits, put them back into your portfolio. The pair told Ferguson that "money found" can help investments grow over time.
Anyone, the pair told NPR can start, or join, an investment club.
BetterInvesting, got its start as the National Association of Investors Corporation, determined to make investing accessible to everyone and helping build a "nation of successful long-term investors," according to the nonprofit's website.
"All it took was a few individuals to invest small amounts regularly, to follow sound, practical investing principles, to maintain an unshakable faith in those principles, and a resolve to help people learn to build a strong financial foundation for themselves and their families," the website notes. "BetterInvesting was borne out of that conviction."
Now with a robust online presence, the nonprofit's mission is to educate individual investors and investment clubs alike. The volunteer-based organization has over 700 volunteer educators in more than 65 chapters around the United States, offering stock investing classes, online selection and analysis tools and investor publications.
Its methodology can be boiled down to four core principles:
• Invest a set amount of money on a regular basis.
• Reinvest all earnings.
• Buy stock in high-quality growth companies.
• Diversify your portfolio.
"We spend most of our energy on principle No. 3," BetterInvesting officials note on the nonprofit's website. "It starts with looking for companies to invest in, verifying company quality, and determining a fair price to pay for the company's stock."
Investment clubs such as the Beardstown Ladies can provide a collaborative environment for investors to learn about investing with like-minded members. Its mission, BI officials said, is to help investors and want-to-be investors learn the skills they need and, if they wish, how to set up an investment club by offering guidance and education.
"Our mission is quite simple," nonprofit members said in a BetterInvestment video on starting an investment club. "We want to create successful lifelong investors."
Information: betterinvesting.org
