Although the idea of forming an investment club might sound fun, it takes work, because clubs must abide by Securities and Exchange Commission...

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Although the idea of forming an investment club might sound fun, it takes work, because clubs must abide by Securities and Exchange Commission (SEC) regulations and other government rules.

Better Investing provides a list of things to do in forming a club. But how the club is organized and operates are up to its members.

Those decisions include whether the club should be a corporation or partnership, whether it banks through its brokerage or has a separate banking account, how much to charge in monthly dues and what to invest in.

Here are some of the primary steps for getting started. A complete list is available at www.better-investing.org.

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• Create a partnership among members.

• Register the club with the state.

• Get a federal tax ID number.

• Set up a brokerage and bank account.

• Develop a mission statement, prepare a partnership agreement and establish operating procedures, such as how often the group will meet and the minimum monthly investment. (Dues and administrative costs typically are about $50 a month, although members may be allowed to invest more, often up to $200 a month.)

Meetings should be conducted in a businesslike manner, with an agenda, approval of minutes, a review of finances, a presentation of possible new stock investments, and votes of the members on buying or selling investments.

You’re on your own for finding members or, as an individual, finding a club to join. SEC regulations bar clubs from advertising for members. However, you may find clubs that are seeking members by attending events sponsored by local Better Investing chapters.

You don’t have to join Better Investing to establish a club, but it does provide both clubs and individual members with investment support such as educational materials, online access to Standard & Poor’s financial data, a low-cost investment plan and general liability insurance. Dues are $40 annually for a club and $25 a year for each member.