Beginner stock market advice

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Want to earn a few dollars and have some fun too? Share clubs, where people pool their wealth to invest in the sharemarket, are springing up across the country. There are plenty of benefits to being in a share club – key among them are that you don’t have to be a financial expert or go it alone while trying your luck on the stock market. A share club also provides a great network where you can learn about investing your money, hopefully reaping financial rewards as well as forming some new friendships.

Advice for beginners

Women’s Financial Network executive director Susan Jackson believes share clubs are ideal for women, but advises newcomers to exercise some caution. She says it’s important to choose your members carefully – “Carrying work or social hierarchies into a club can cause problems,” Susan warns. She recommends taking in people who are financially minded and able to make independent decisions, as well as people who have the time to commit to regular meetings and carry out research. Another key consideration is whether all your members have similar ethical viewpoints – someone who hates hearing about trees being cut down probably won’t want to invest in a forestry company. And as with many things, it’s important to maintain a sense of humour.

Club rules

The Australian Stock Exchange (ASX)’s study into investment clubs reports that a partnership structure is best. Two signatories on every cheque is good protection against fraud, and regular deposits into the account should average $20-$50 a week. Minute-taking is a must.

Success stories

A new share club – Women’s Enterprise Generating Outcomes (WEGO) – has recently set up on Sydney’s north shore with 12 members, ranging in age from 25 to 65 years. Their initial investment was $200 a person, on top of which they each contribute $30 a month. But it’s not just about profit; it’s also for learning and fun. Chairperson Melinda Thorn, 25, says that prior to forming the club, the only stock she knew about “was in my soup”. Anke Vorbach traded shares on her own before combining resources with other women and joining the Prosper Us Network in Adelaide. The 13-member group was set up in 2001 with a five-year plan. Each woman contributes $60 a month, on top of her initial investment. Anke says there’s plenty of heated discussion about what to buy. “We’re women – if we have $1,000 in our hands then we want to spend it,” she laughs.

Top tips

Vicki Griffiths is the financial controller of a building company in Newcastle and founded the Hunter Investment Strategies Group five years ago. Her group’s original investment of $2,000 a person has now grown in value to $10,000 each and the women, ranging in age from their mid-30s to mid-50s, have pledged that when they hit $20,000 they’re going on a trip to Vietnam. Vicki recommends choosing solid, blue-chip stocks, in the ASX’s top 100. She says everyone should contribute regularly to the fund and rotate their roles in the club. “Am I a good saver? No. I’ve got champagne tastes on a beer budget but this group has made me better,” Vicki confesses.

Getting started

If you’re interested in joining a share club, try approaching the Women’s Financial Network for contacts. Or why not round up some like-minded friends? The Women’s Financial Network sells share club starter packs (containing software, sample agreements etc.) to help you set up. Take a look at www.womensfinancialnetwork.com.au.

Case study: On the money

One of the first female share club success stories was the Beardstown Business and Professional Women’s Investment Club (later known simply as the Beardstown Ladies). A group of 16 women from Beardstown, a small Illinois town in America, the Beardstown Ladies struck it rich after forming a share club. The group of grandmothers had no previous experience in the sharemarket, but shot to national fame in the ‘90s after their investments were thought to have beaten those of America’s top index managers, with an average 23 percent return on their investments over 10 years.

Words: Julianne Dowling. Photography: Scott Hawkins & Sam McAdam