Taking a look at Investing Clubs – where ideas about money are pooled

A few years ago we were honoured to attend a meeting of the Ottawa Share Club – a group of investment-savvy individuals who share ideas on investing strategies, tips and tricks.

It was pretty eye-opening, even for a reasonably experienced (small) investor, to see how others make their way around the stock and real estate markets. The meeting was held in a downtown Ottawa venue – we bravely travelled by OC Transpo that evening!

Save with SPP decided to take a look around to see what others are saying about investment clubs.

The Supermoney blog states “investment clubs pool their money to invest collectively, often to learn about investing, reduce costs, and make more significant investment decisions.”

“An investment club is a group of individuals who pool their money to invest collectively in stocks, bonds, or other securities. Unlike a traditional investment fund managed by professionals, investment clubs are typically managed by the members themselves, who make joint decisions on where to invest. These clubs can vary significantly in size and structure, ranging from informal groups of friends to formally registered partnerships with legal obligations,” the blog tells us. 

At the Wealth Awesome blog, noted financial writer Christopher Liew tells us that “whether you are a new investor or more seasoned in your approach, it can help to have a community or group of investors to bounce ideas off of.”

While getting a home run tip – such as the “extremely risky and highly speculative” success of the GameStop stock a few years ago – is perhaps a rare thing, investment clubs can “help you expand your portfolio knowledge,” he writes.

He lists a few of what he feels are the best investment clubs in Canada.

“Personal Finance for Canadians is a group on Reddit where Canadians can discuss anything related to Canadian personal finance. Topics that are usually covered include taxation, goal planning, budgeting, baking, insurance, credit cards, savings, and many more,” Liew writes. There are more than one million followers, he adds.

Another club cited by Liew is “Canadian Dividend Investing, a group on Facebook where members share dividend strategies and approaches. Dividend investing involves focusing on companies that offer investors a good yield through dividends.”

Other examples of groups in Liew’s article include Blossom (a mobile app) Canadian DIY Stock Investing (a Facebook group), the Wealthsimple Trading Community and the Canadian Real Estate Investors Association (Facebook).

“Sharing or discussing ideas in a community or group setting can be very beneficial when it comes to learning about investing and how the market functions,” he concludes. “If you are able to join several groups that cover different investment areas (i.e. stocks and real estate), you may have access to well-rounded opinions on the overall market in Canada.”

Writing for GoBankingRates, Sean Bryant tells readers how they can start their very own investment club.

“One of the biggest reasons people choose to start an investment club is that they want to learn and share ideas with people who share their values. It makes sense to start an investment club with family members because, most of the time, your values are well-aligned. Yes, you may have different opinions, but your values are generally on the same page,” he observes.

Keeping the group fairly small is a logical first step, he suggests.

“Most investment clubs will have at least five people but no more than 15 or 20. You must have enough ideas, but too many can make things more difficult. Each person will be required to make an initial investment, say $500 or $1,000. Then, each month, a lower investment will be required. Most clubs stick with a $50 or $100 monthly investment,” he explains.

The group will need to set investing goals, continues Bryant. While the overall goal is going to be “making money and learning from others,” you also need to establish guidelines. How much risk is the group ready to take on? Are you going, he asks, all in on equities, or are other investments, such as alternatives, in play for your group?

In the days before there were low-cost brokerages, a pooled fund run by an investment club was a way to minimize investment fees. This pooling is less common now that there is a low-fee option for buying securities. But, if you are planning to have the money in a common, pooled account, legal advice for setting up the fund and rules governing it is strongly recommended. Bryant’s article lists U.S. legal steps, so let’s just say go see a lawyer and get their recommendation before setting up anything here.

Pooling is a central concept for the investment team at the Saskatchewan Pension Plan. Member contributions are invested in a large, professionally managed pooled fund with management expenses typically below one per cent per annum. The track record – an average rate of return of eight per cent annually since inception – has been impressive (Rate of Return & Fund Performance | Saskatchewan Pension Plan).

SPP’s investment expertise is available to any Canadian with available registered retirement savings plan room – and if you have existing RRSPs, you can transfer them into your SPP account once you join. SPP will grow your savings and income options when you retire include a lifetime monthly pension, or the more flexible Variable Benefit.

Check out SPP today!

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Seven tips for stretching your fixed-income retirement dollars

Whether you are getting a monthly pension cheque, or annuity payments, or whether you are drawing down your retirement savings from a lump sum, one thing’s for sure — the amount of income you’ll be living on is fixed.

Unlike work, there’s no chance of a big promotion or bonus when you are retired. You have to live on a fixed income. So what can be done to cope?

Writing for the Supermoney blog, Julie Bawden-Davis offers up seven very helpful tips on how to get the most out of your fixed-income dollars.

First, she writes, you need to “live below your means.”

“If you’ve been saving up for retirement since your college years and can afford to party it up in the Caribbean well through retirement, more power to you. If not, get real. Living on 20-25 per cent less than your income enables you to save money for the unexpected, be it a medical problem that requires out-of-pocket expenses or a present for a surprise birthday party,” she writes.

One easy way to achieve this, she adds, is to ditch the car and take public transit (if you live somewhere where that’s doable).

Her second tip is to “micromanage your budget.”

“Prioritize your expenses, starting with set costs such as insurance, healthcare, rent or mortgage, and utilities. Then add the average amount you spend on discretionary expenses each month, such as entertainment, food, and gas,” she advises. Again, cut what you can with the goal of having 20-25 per cent of income directed to a savings account.

Her third tip is to avoid taking on new debt.

“A shiny new purchase may seem like a good idea at the time, but busting your budget can have a lasting impact that is likely to lower your standard of living substantially,” she explains.

She suggests that retirees consider moving to another jurisdiction that offers lower taxes, or to “downsize to a smaller place.”

“If you’re still living in the family home, now may be the right time to sell and move into a smaller, less expensive place. Doing so often gives you money to invest and save, and a smaller home will cost less to run,” she writes.

A key bit of advice offered in her column is the idea of enjoying what’s out there that is for free, or that costs very little.

“It’s ironic that when you finally have time to pursue hobbies and interests, your income is limited. It is possible, though, to enjoy yourself by spending little to no money at all. If you’re eligible, take advantage of senior specials, and check local publications and websites for free events. Museums, zoos, and botanical gardens often have complimentary admission days just for you,” she notes.

Her final bit of advice is to “unfix” your fixed income by doing a little work on the side. Working part time or having a “side hustle” can bring in a little extra money, and be fun as well.

“Living on a fixed income does take some adjustment, but with some creative budgeting, you can enjoy a satisfying retirement,” she concludes.

This is all very good advice, and we can add in a few more ideas, gleaned from our fellow senior citizens.

• Consider going to one vehicle. If you’re both not working, you can share one car rather than each having your own. You’ll save a fortune on fuel, maintenance, and so on.
• Some of our retired friends sold their houses and are now renting. No property taxes, no driveway shovelling, lawn cutting and other costly expenses.
• Thrift stores like Value Village or the Sally Ann are great places to get what you need for far less. We found a brand new cart bag for golf clubs for only $20 there!

The more income you end up with in retirement, the easier things will be. If you don’t have a workplace pension plan — like the majority of Canadians — don’t worry! Any Canadian with registered retirement savings plan (RRSP) room can join the Saskatchewan Pension Plan. Let SPP handle the heavy lifting of investing your savings and growing it into an income stream when you retire. You have the option, when you retire, of choosing a lifetime annuity for your SPP account.

And contributing to SPP is now limitless! You can contribute any amount annually (up to your available RRSP room) and can transfer in any amount from another RRSP. Check out SPP today!

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