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Ojijo's investments club manual

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Ojijo, the author, is a financial literacy & personal development speaker; performance poet; lawyer; researcher; trainer; social entrepreneur; network marketer; spiritualist, (Practicing Open …

Ojijo, the author, is a financial literacy & personal development speaker; performance poet; lawyer; researcher; trainer; social entrepreneur; network marketer; spiritualist, (Practicing Open Religion); and author diversely published in religion, poetry, law, history, politics, languages, financial literacy and financial investments, and personal development!

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  • 1. Ojijo’s Investments Club ManualOjijo Is it not time I got my money working for me?
  • 2. Ojijo’s Investment Clubs Manual! 139 PageDedicated to the Ojijo Family , and to the families and friends who wish to find financial freedom through investing together!
  • 3. Book Title: Ojijo’s Investment Clubs Manual Ojijo’s Investment Clubs Manual! Copyright © 2010, Ojijo. All rights reserved. This work is copyrighted by the author. No parts 139 of this publication maybe reproduced, stored in a retrieval system, or transmitted in any form, without permission of the publisher. Page FIRST EDITION, 2010 For enquiries or orders, Email ojijop@gmail.com or Call (256) 701 100 059 BOOK TITLES BY OJIJO Ojijo’s Personal Development Books How to Identify & Develop My Talent, My Profession & My Career The Gift of E11even Moves to Make Me Wealthy Open Religion: My Religion is the Best Religion! Seventy-7 Moves of a Sexy Woman 99 Ways to Make People Happy! Ojijo’s Financial Literacy & Investment BooksOjijo’s Guide to Alternative Investments (Property/Fixed Assets, Insurance, Forex, Private Equity, Collective Investment Schemes, Collectibles & Commodities) Making My Child Financially Intelligent: Money Lessons by Age Group (from 4-18 yrs) Ojijo’s Guide to Financial Instruments & Financial Investments Ojijo’s Guide to Entrepreneurship & Raising Capital Ojijo’s Investment Club Manual Ojijo’s Other BooksStupid & Unintelligent: The Inferior Mindset of Black Leaders to Whites and the Role of the New African President! The Luo Nation: History, Culture & Conversational Phrases of the Luo Peoples of Africa Tuongee Kiswahili Conversational Phrasebook (with Audio CDs & DVDs) Ojijo’s Guide Book To Travel & Experience the World! Fireplace Stories: Ojijo’s Performance Poems The Mungiki
  • 4. Ojijo’s Investment Clubs Manual! 139 Page About Ojijo’s Investments Club ManualThis is an essential reference for all investment clubs - both new and established - toensure that they are run correctly and efficiently. A successful investment club needs torun smoothly with a great amount of reliability and confidence among its members.When all members of the club expect and meet the same requirements, everyone workstogether in a way that induces success and profitability. Ojijo’s Investment Clubs Manualis the investment clubs’ bible and tells me everything I need to know about joining,starting or running a successful investments club. The vast majority of investments clubsin East Africa region swear by this guide.
  • 5. Ojijo’s Investment Clubs Manual! Contents! 139 PageWHAT IS AN INVESTMENT CLUB?................................................................................6 INVESTMENT CLUB IS AN ORGANIZED GROUP............................................................................................................6 INVESTMENT CLUB HAS THE SAME DREAM, VISION AND OBJECTIVES ................................................................................6 AN INVESTMENT CLUB IS A LEGAL ENTITY ..............................................................................................................9 INVESTMENT CLUB INVESTS, IT IS A BUSINESS, NOT WELFARE CLUB ..............................................................................11 TYPES OF INVESTMENT CLUBS ..........................................................................................................................46WHY AN INVESTMENT CLUB? ................................................................................50 NETWORKING .............................................................................................................................................50 LEARNING ..................................................................................................................................................52 EARNING ...................................................................................................................................................54HOW AN INVESTMENT CLUB WORKS/CLUB ADMINISTRATION......................58 NETWORKING/MEETING..................................................................................................................................58 LEARNING/EDUCATION....................................................................................................................................71 INVESTMENT/EARNING ...................................................................................................................................73JOINING AN INVESTMENT CLUB.................................................................................86 HOW IS IT ORGANIZED/ADMINISTRATION? ...........................................................................................................86 IS IT NETWORKING?......................................................................................................................................87 IS IT EARNING?............................................................................................................................................87STARTING AN INVESTMENTS CLUB (THE 7 STEPS)..............................................89 STEP 1: THINKING BIG (DEVELOPING THE IDEA TO FOUND THE CLUB) ............................................................................89 STEP 2: FINDING MEMBERS FOR MY INVESTMENT CLUB............................................................................................92 STEP 3: THE INAUGURAL CLUB MEETING (1ST MEETING) ......................................................................................93 STEP 4: INVESTMENT PRINCIPLES & CLUB ADMINISTRATION (2ND MEETING)....................................................................99 STEP 5: APPROVAL OF DOCUMENTS & BEGINNING OF RESEARCH (3RD MEETING)............................................................101 STEP 6: THE FIRST INVESTMENT/TRADE (4TH MEETING)........................................................................................101 STEP 7: JOINING AN INVESTMENT CLUB ASSOCIATION..............................................................................................102 ...........................................................................................................................................104SAMPLE INVESTMENT CLUB DOCUMENTS............................................................104 SAMPLE INVESTMENT CLUB PARTNERSHIP AGREEMENT.............................................................................................104 SAMPLE CLUB RULES & REGULATIONS...............................................................................................................112SAMPLE INVESTMENTS CLUBS STRATEGIC PLAN...............................................124 ...........................................................................................................................................................126FINANCIAL LITERACY & PERSONAL DEVELOPMENT BOOKS .........................133 MAIN READING TEXTS..................................................................................................................................133 ADDITIONAL READING TEXTS ..........................................................................................................................133
  • 6. Ojijo’s Investment Clubs Manual!WHAT IS AN INVESTMENT CLUB? 139INVESTMENT CLUB IS AN ORGANIZED GROUP PagePeople are becoming keener about taking advantage of available opportunities to pool money for investment. Groups are emerging as a good vehicle to collectively achieve investment goals and create discipline to save and invest in ventures that an individual cannot manage. The members do not need to have any prior knowledge. Groups offer the structure and support that many people need to get started investing, and groups make it possible to get into the market without a big initial investment. The fact that a group can accumulate large investment amounts from small individual investments also helps reduce the exposure to risk for individual investors. Groups formed for investment purposes are called investment clubs.An investment club is an organized group of individuals, usually comprised of friends, coworkers, church members, neighbors or family members, who meet on a regular basis to network, learn and pool their spare cash and invest in the stock market and/or other investment opportunities.When I am part of an investment club, each club member contributes a certain amount of money regularly, mostly each month, which is deposited on a joint investment bank account. Then, using the account, the members of the club agree on where to invest our savings: purchase of land with intention to sell at a profit, shares, rental property, businesses etc.INVESTMENT CLUB HAS THE SAME DREAM, VISION AND OBJECTIVES ¥ The Dream, Vision & Mission • One DreamAn investment club must have a dream, and the members must share in this dream. Sameness of dream creates harmony in club operations. The Bible beautifully captures the importance of harmony in the team thus; ‘can two walk together unless they agree?’Our dream is the ultimate goal of our coming together, the where we are going, and the destination we seek. It will be the basic building block of our success in investing. Our dream is that which we want so badly, that we are willing to pay any price to achieve it. It is that which lingers in our mind 24 hours a day. It is something we think about every moment. Zadok Rabinowitz correctly said that ‘A mans dreams are an index to his greatness.’ Konrad Adenauer was correct when he said that, ‘We all live under the same sky, but we do not have the same horizon.’ Muhammad Ali, the boxing legend, and three-time World Heavyweight Champion, confessed that ‘Champions are not made in gyms. Champions are made from something they have deep inside them; a desire, a dream.’ Before we start an
  • 7. Ojijo’s Investment Clubs Manual! investment club, we must find our dream and stand by it. ‘A man who stands for nothing will fall for anything.’ said Malcolm X, the African-American Muslim 139 minister, public speaker, and human rights activist. Carl Sandburg, the American writer and editor, best known for his poetry, said that ‘Nothing happens unless first Page a dream.’Our dream is the compelling reason why we will wake up and read about investments, carry out research and responsibilities in the investment club, and come for meetings early enough and consistently. It is the reason why we wake up early, go to meetings, and save for investments. Our dream is more important than what we do, or how we do it. Thomas Edison dreamed of a lamp that could be operated by electricity, began where he stood to put his dream into action and despite a thousand failures, he stood by that dream until he made it a physical reality. The power of a dream! Thoreau phrased it well; ‘dreams are the touchstone of our character’. Angelo D’Amico was in agreement when he wrote that, ‘if the dream is big enough, the facts do not count.’ The dream of every investment club member is financial freedom; financial independence. • One VisionOur vision is the picture of our dreams realized. Our dream is based on our vision. Helen Keller, the blind, deaf and dumb motivational speaker and teacher who was the first such disabled person to earn a bachelors degree was once asked, ‘what would be worse than being born blind’, and she responded, ‘to have sight but no vision’. The vision is the key that will keep us focused. Hubert H. Humphrey said, ‘What you see is what you can be.’ Indeed, half the battle in life of getting what we want is worn when we know what it is that we want; the other half is worn when we do what we must do to get it. Napoleon Hill advises us thus, ‘Cherish your visions and dreams, as they are the blue print to your achievement.’ The vision of an investment club is a state of financial independence. • One MissionThe mission of an investment club is to provide a program of sound investment information, networking, education and support that helps create successful lifetime investors and financially free individuals. By becoming confident and knowledgeable investors, the members are empowered to build better financial futures for themselves and their families. A mission statement for an investment club is a simple way for club members to stay focused and aware of the goals that they have set out for their investment club. The mission statement will outline clearly how the investment club is going to be organized and how it will or is going to reach the goals. The mission statement should be written down by each member of the investment club, and any future members should have a copy of the mission statement. The mission of the investment club is to make each member financially independent.
  • 8. Ojijo’s Investment Clubs Manual! ¥ The Goals & Objectives 139 • One ObjectiveThe main objective of the investment club is to pool money to invest in another Page venture to make more money. Investment clubs are a collection of like-minded people who share a common objective, making smart investment decisions for mutual economic benefit of members. It is very important to have common objectives in order to measure achievement and create a healthy team atmosphere. Everything is shared-from research to investment choices to successes and failures. The investment club will take my money and use it to make more money for me. As club members, we agree on financial strategy and mutual financial objectives that are strictly adhered to. This makes it easier to select opportunities that are right for the club. The club hence serves to pique the interest of members with regard to investments, the world of finance, and the current events in the world around them. The club also emphasizes cross-disciplinary skills such as research, report writing, leadership skills development and public speaking. In addition, club involvement also leads to an increasing financial awareness related to common sense saving, budgeting; long-range planning, social networking and goal setting that will benefit the club members in the future. • The Three Goals of an Investment ClubMost Clubs have three stated goals: First, to learn about investing generally, but with specific reference to financial instruments, chief amongst them being stocks; Second, to give the members a real-life experience in trading stocks and other investments and hence make a return on their investments and become rich; and Third, to provide opportunities to network with fellow investors, industry leaders and successful investors. If the club has a definitive game plan and the members on board all share the same goal then it has a much better chance of success. All members of the club should have the same philosophy about investing.If some members of the group are only interested in making a profit, instead of learning more about investing and the details involved, there will be a divided set of goals. Each member of the investment club needs to have the same goal in mind and the same methods of achieving that goal. Members of the investment club should be clear on what the long term goals of the club are all about. It is through constant focusing on the above three goals that the club will attract them and be successful. When these goals are clear, then they will drive, push, and pull the club, even when the weather is sickly, even when the papers are negative, even when the ‘friends’ are laughing at members, even when there is no feeling of moving on.Then the club should create benchmarks or milestones that members can use to measure the progress and know whether the club is on track. The club’s success will be the result of actions taken every day. The club needs to meet deadlines
  • 9. Ojijo’s Investment Clubs Manual! and goals. Members should keep in mind that the ultimate aim of an investment club is to provide more enjoyment in their life rather than taking away what is 139 already there. This is supposed to be an exciting venture so members must make sure that they enjoy every second of it. If it simply becomes yet another source of Page stress, then it ultimately is not something worth holding onto. In achieving the goals, the club should apply the Pareto Principle, to give 80% of the club’s energy, time, skills and money to the 20% of the most important tasks, the priorities. The club should set goals that exploit the strengths and minimize the weaknesses of the members. This will allow the club to realize and make full use of its opportunities, and control the threats of failure. There should be an equal amount of growth and stability that is agreed upon.AN INVESTMENT CLUB IS A LEGAL ENTITY ¥ Why the Legal Entity?An Investment Club ought to be a legal entity. A legal entity is an organization that the law treats as if it were a person, capable of entering into contracts and of being sued and in includes, but is not limited to, an individual (adult and sane), partnership, association, company, corporation and trust.Unlike independent individuals investing directly into the stock market, an investment club pools money from each member, and hence the need for clarity of rights and duties of the members. The legal entity enables the investment clubs to have rules and a constitution to ensure smooth running and for the protection of its members by defining rights and duties of each member. Further, once it is legally established, standardized accounting records can be easily kept for it. Additionally, the legal entity also provides the investment club with a solid structure to ensure the clubs agenda is carried out efficiently and without friction. ¥ Types of Legal Entity: Partnership, Corporations, Cooperatives or AssociationAn investment club can be registered as a corporation, cooperative, partnership or association.A company/corporation is a form of business organization/association that is separate and distinct from its owners. Corporations have the right to enter into contracts, loan and borrow money, sue and be sued, hire employees, own assets and pay taxes. The most important aspect of a corporation is limited liability, that is, the shareholders are not held personally liable for the companys debts. A corporation is created (incorporated) by a group of shareholders who have ownership of the corporation, represented by their holding of common stock. Shareholders elect a board of directors (generally receiving one vote per share)
  • 10. Ojijo’s Investment Clubs Manual! who appoint and oversee management of the corporation. While an investment club could incorporate, the double tax treatment on corporate distributions makes 139 the corporate structure less desirable than a partnership. PageA partnership is a business organization in which two or more individuals manage and operate the business. Partners (owners) share amongst each other the profits or losses of the business in proportion to their shares. Typically, a general partnership does not generate any tax liability on its own; instead, any tax liability is passed through to members each year. An investment club can register as a partnership and then when the portfolio has evolved over the years (and is no longer limited to stocks and shares but has expanded to include other investment opportunities to incorporate the skills and interests of all members), the club can register a limited company arm for the purpose of pursuing business ventures and alternative investments outside the stock market.Further, an investment club can be registered as a cooperative. This is especially relevant when the members are more than 20, in which case we cannot register as a partnership. Further, it works where we are more than fifty members, in which case we cannot register as private limited company anymore.An investment club could also be registered as an association with the institution where the members are enrolled, for instance, at a university. An association is any group of people who have joined together for a particular purpose, ranging from social to business, and usually meant to be a continuing organization. It can be formal, with rules and/or by-laws, membership requirements and other trappings of an organization, or it can be a collection of people without structure. An association is not a legally-established corporation or a partnership.
  • 11. Ojijo’s Investment Clubs Manual!INVESTMENT CLUB INVESTS, IT IS A BUSINESS, NOT WELFARE CLUB 139Investment clubs are formed by people in the business of investment. "The Social Page Responsibility of Business is to Increase its Profits" so said Milton Friedman, the great economist. He repeated that, ‘The business of business is business.’ The purpose of clubs is to make money, not welfare. An investment club is a business. It is not just a hobby but an actual business venture where I will be working together with other people on investing our money. An Investment club is formed by people in the business of investment; people who want to make money. The clubs provide venues for training and education of members in the ways of the business world. Club members help each other out, and so they enjoy more security in their investments.Some investments that members engage in include purchase of land with intention to sell at a profit, shares, rental property, businesses etc. Investment clubs are run in a democratic fashion. Members, as a collective, elect their officers. They also vote on stocks, bonds or securities that they want to purchase, how many they want to buy, whether or not they want to sell, whether or not the interest rate is conducive to a comfortable amount of growth. There should be an understanding established of what amount of the profits that are realized from investments are going to be held and which amount is going to be reinvested immediately back into the stock market. Investment clubs are dedicated for those who are looking for a secondary income or for those, who want to get FINANCIAL FREEDOM and FINANCIAL INDEPENDENCE. ¥ What Is Investing?To invest is to purchase an asset (something that has value that will produce income or appreciate in value and when liquidated, will realize more than was spent in acquiring it).Investing is the commitment of money or capital to purchase assets in order to gain profitable returns in form of interest, income, or appreciation of the value of the instrument. To invest is related to saving or deferring consumption, BUT with the aim of that money so saved and not consumed being used to bring more money. Robert Kiyosaki taught that, ‘to invest is to mind my own business.’ • Investing Is Not GamblingInvesting is not gambling. Gambling is putting money at risk by betting on an uncertain outcome with the hope that I might win money. True investing does not happen without some action on my part. A "real" investor does not simply throw his or her money at any random investment; to be a real investor I must perform thorough analysis and commit capital only when there is a reasonable expectation of profit. Yes, there still is risk, and there are no guarantees, but
  • 12. Ojijo’s Investment Clubs Manual! investing is more than simply hoping Lady Luck is on my side. Investing is not a get-rich-quick scheme. 139 ¥ Two Types of Investors & Investing PageThere are two broad types of investing and investors: There are two basic types and broadest forms of investing. Investors can be loaners or owners. It is either an equity investment or a debt investment. € Loaners invest in debt instruments. A debt investment is where I loan my money to someone else for an amount called interest. These may take the form of a bank savings account, a certificate of deposit, Treasury notes or corporate bonds among others. A debt investment is unique in that the borrower is obligated to the debtor to pay the money back. Debt investments give me a lower return than equity investments. € Owners invest in equity instruments. An equity investment is where I loan my money to someone else for a share of the profits he receives from the way he uses the money. These investments involve ownership of all or part of tangible or intangible assets such as real estate, intellectual property or stock in a company. An equity investment differs from a debt investment in that there is no obligation on the part of the debtor to pay me back. Debt investments are also lower in terms of risk than similar equity investments. ¥ Investment VehiclesThere are many different ways I can go about making an investment. There are a wide variety of different types of investment products and new ones are emerging all the time. These options are referred to as "investment vehicles," or “investment products”, which is just another way of saying "a way to invest." Each of these investments is something I purchase or place my money into in return for the interest that is generated over time and paid back to me. These vehicles are grouped according to the type of asset invested in. There are nine general categories of such investment vehicles, based on nine categories of assets as classified by Ojijo in his all time classic, The Gift of E11even Moves to Make Me Wealthy!These nine areas are referred to as The Ojijo 9; and they are divided into three broad categories, namely, Personal Development/Self-Help; Traditional Assets; and Alternative Assets: 1. Personal Development/Self-Help, which is the greatest form of investment, involves engaging in activities which enable me to identify & develop my
  • 13. Ojijo’s Investment Clubs Manual! talents and skills; realize my potential; and achieve my dreams & aspirations so as to enhance the quality of my life and contribute to the community. Two 139 guides to personal development are Ojijo’s The Gift of E11even Moves to Make Me Wealthy, which teaches me the eleven areas that I need to develop to enjoy Page the complete and wealthy lifestyle, which are health, relationships, riches/money, career, adventure, happiness, dreams & goals, positive attitude, controlling the day, helping people and being peaceful); and Ojijo’s Guide to Identify & Develop My Talent, My Profession & My Career.The traditional assets/investment products include, 1. Financial Instruments, also called securities, are a real (hard copy) or virtual (electronic) documents representing a legal agreement/contract involving a monetary value. They include those which indicate that someone owes me money (Debt Instruments/Bonds), or that I own part of some business process (Equity Instruments/Shares), or cash investment, whose values are determined directly by the market (Bank Deposits/Bank Accounts) or those that which are linked to a specific asset or indicator/variable and are used to trade financial risks (Financial Derivatives- options, futures, forwards and swaps). A practical book to read for further knowledge in investing in financial assets is Ojijo’s Guide to Financial Instruments & Financial Investment. Alternative Assets, which are assets other than traditional investments (stocks, bonds or cash). A practical book to read for further knowledge in fixed asset investing is Ojijo’s Guide to Alternative Investments (Property/Fixed Assets, Insurance, Forex, Private Equity, Collective Investment Schemes, Collectibles & Commodities). Alternative assets include; 1. Collective Investment Scheme (CIS), is a pool of money from various investors for investing in various assets. It can be a professional scheme, managed by handled by an individual, fund manager, group, bank, or company, called investment company, and such professionally managed schemes can be closed- ended (limited number of shares issued once), open ended /mutual funds (open for new investors to buy shares). A practical book for identifying and investing in investment companies is Ojijo’s Guide to Alternative Investments (Property/ Fixed Assets, Insurance, Forex, Private Equity, Collective Investment Schemes, Collectibles & Commodities). Collective Investment Schemes can also be self-managed by the members pooling the resources together, called investment clubs, which allow members to also learn and network. A practical book to read for further knowledge in forming, joining and running an investment club is Ojijo’s Investments Clubs Manual. 2. Property/Fixed Assets, which includes long-term tangible/physical assets (such as machinery, land, buildings, equipments, vehicles), or intangible/technological asset, which is a tool, technique, craft, system or method of organization in
  • 14. Ojijo’s Investment Clubs Manual! order to solve a problem or serve some purpose. Technology Assets can also be in software or computer application form, in which case they are called 139 Information Technology/IT Assets (commonly referred to as software). Collectibles, which are objects regarded as being of value or interest, either Page 3. because they are old/antiques, or they are specially manufactured to be collectibles, including art, antiques, coins and stamps; 4. Commodities, which are naturally occurring/raw/primary products, and include agricultural products, also called soft commodities (soya, grains, vegetables, etc); energy products (oil, gas, electricity and green energy); base metals (copper, aluminum, iron, etc); and precious minerals (gold, silver, diamond, uranium, palladium and platinum. 5. Private Equity, which involves injecting working capital to start-up or operating private companies and owning equity/shares for a period until returns are collected and is done by venture capital firms, private equity funds or angel investors through leveraged buyouts, venture capital, growth capital, distressed investments and/or mezzanine capital; 6. Insurance Assets, which are insurance products that have both a protection as well as an investment component such as endowment plans, pension plans and investment bonds; and 7. Forex Investments, involves is trading currencies from different countries against each other. The foreign exchange market, which is usually known as "forex" or "FX," is the largest financial market in the world.It does not matter which method I choose for investing my money, the goal is always to put my money to work so it earns me an additional profit. Even though this is a simple idea; it is the most important concept for me to understand. ¥ Why Bother Investing? • • Investing Makes Me RichPeople invest because they want to increase their personal freedom, sense of security and ability to afford the things they want in life. Investing allows my child to take the money he has saved, and grow it, by creating his own financial portfolio. Investing is about making his money work for him.When people invest, they spare money to offset the effect of inflation on idle cash as well as to benefit from an additional source of income and capital appreciation. Everybody wants more money. Investing allows him to take the money he has saved, and grow it, by creating his own financial portfolio. The only way to be rich is to invest and have assets. King Solomon knew it several millennia ago when he wrote, ‘the rich man’s strength is in his city’. The rich man’s city is his assets. An asset is any item, of value, usually purchased, or equivalently a deposit is made in a bank, in hopes of getting a future return or interest from it. An asset is expected to give returns without any work on the asset. The rich do not work
  • 15. Ojijo’s Investment Clubs Manual! for money. The rich work to build assets that will make money work for them. Riches protect the rich from pestilence of poverty. All rich people have assets. 139 Whether they inherited it, married into it, won it, borrowed it, created it, or (God forbid) stole it, they all have assets. Assets leverage time and effort, so that money Page comes passively, even when the investor is not working. • Investing Makes My Money Work For Me!To become rich and financially secure, I need to mind my own business; I need to invest. I need to have my own business. Without my own business, I have no financial foundation. And without financial foundation, I will be poor, broke and miserable. Investing is the science of money making money. As Benjamin Franklin rightly noted, "Money makes Money, and the Money that Money makes, makes more Money."Investing is about making my money work for me. Investing means putting my money to work for me. Essentially, it is a different way to think about how to make money. Growing up, most of us were taught that we can earn an income only by getting a job and working. And that is exactly what most of us do; but there is one big problem with this: if we want more money, we have to work more hours using more effort. However, there is a limit to how many hours a day we can work, not to mention the fact that having a bunch of money is no fun if we do not have the leisure time to enjoy it. • Investing Leverages Time and EffortSince I cannot create a duplicate of myself to increase my working time and effort; I need to send an extension of myself - my money (and hence time and effort) - to work for me. This is called investing, ‘putting my money to work for me’. ’That way, while he is putting in hours for my employer, or even mowing my lawn, sleeping, reading the paper or socializing with friends, he is becoming rich because my money is making more money for me elsewhere. Quite simply, making my money work for me maximizes my earning potential whether or not I receive a raise, decide to work overtime or look for a higher-paying job. This leverages my time and effort, giving me more hours and effort I would have had alone. • Taking Control of My FinancesTaking control of my personal finances will take work, and, yes, there will be a learning curve. But the rewards will far outweigh the required effort. Contrary to popular belief, I do not have to allow banks, bosses or investment professionals to push my money in directions that I do not understand. After all, no one is in a better position than I am to know what is best for me and my money.
  • 16. Ojijo’s Investment Clubs Manual!Investing is one of the major missing pieces in many financial education programs. I am taught about saving but not about investing in assets that will produce 139 passive income for me. Saving to purchase an item he really wants is not as difficult as it may seem at first if I use a system, and it feels great when I do reach Page my savings goals. I will always have money for continued education. I am less likely to develop the habit of feeling guilty for spending my own money; an emotion many adults suffer from. ¥ The Ojijo 9 (The Nine Fundamental Principles of Investing)Investing is guided by certain core principles which when followed, will lead to successful investing and becoming rich and financially independent. The principles, herein referred to as The Ojijo 9, or The Nine Fundamental Principles of Investing, are as below: • Principle 1: Dreaming, Thinking Big & Goal Setting!To invest is to make my money make money for me. Before I start investing, I must be clear of how much money I want to invest, and how much money I want to get in return. I must know exactly how much I want. It is through constant focusing on what I want in this life that I will attract it. It must be crystal clear in my mind; what it is I seek. Then it will drive me, push me, and pull me, even when the weather is sickly, even when the papers are negative, even when the ‘friends’ are laughing at me, even when I do not have the feeling of moving on. After all, the good life I am seeking is right here. Whatever I am seeking is seeking me. I create my own reality. This is my dream; the dream. Napoleon Hill, the American author and one of the earliest producers of the modern genre of personal-success literature, in his famous work, Think and Grow Rich, advises us to constantly keep in our minds that, ‘The starting point of all achievement is desire. Weak desires bring weak results, just as a small amount of fire makes a small amount of heat.’ My dream must be big, a big dream. And I must hold on to it. As Benjamin Franklin said, ‘I will not be like other men, who die at age 25, because they stop dreaming.’ Why should I not dream? I am encouraged by George Bernard Shaw when he wrote, ‘You see things that are; and you ask ‘Why?’ But I dream things that never were; and I ask ‘Why not?’Life in itself knows no limits or boundaries. Life is infinite and free and contains within itself all possibilities. Life is meant to be abundant in all spheres. The concept of life as limitation represents ignorance of self and fear, and it is this fear that is the cause of all dis-ease in my life. ‘Life is phenomenal, a magnificent trip’, Dr. Norman Peale says. Life is free and so am I. This is my life I am writing down. I am the Michelangelo of my life, I sculptor my image, the image I want of myself. I will paint my own reality, I will choose the colour of the eye shades I want to wear, and I will see this life as I want.
  • 17. Ojijo’s Investment Clubs Manual! • What Is My Dream? 139My dream is the vision, the ultimate goal of my life, the where I am going, and the destination I seek. It is the basic building block of my success. Helen Keller, the Page blind, deaf and dumb motivational speaker and teacher was once asked, ‘what would be worse than being born blind’, and she responded, ‘to have sight but no vision’. The vision is the key that will keep me focused. Hubert H. Humphrey said, ‘What you see is what you can be.’ Indeed, half the battle in life of getting what I want is worn when I know what it is I want; the other half is worn when I do what I must do to get it.My dream is what I want so badly, that I am willing to pay any price to achieve it. It is that which lingers in my mind 24 hours a day. It is something I think about every moment. Zadok Rabinowitz correctly said that ‘A mans dreams are an index to his greatness.’ Konrad Adenauer was correct when he said that, ‘We all live under the same sky, but we do not have the same horizon.’ Muhammad Ali, the boxing legend, and three-time World Heavyweight Champion, confessed that, ‘Champions are not made in gyms. Champions are made from something they have deep inside them a desire, a vision, a dream.’ Today, I must find my dream and stand by it. ‘A man who stands for nothing will fall for anything.’ said Malcolm X, the African- American Muslim minister, public speaker, and human rights activist.My dream is the compelling reason why I do what I do every day. It is the reason why I wake up early, go to school or go to work every day. Why I do something is more important than what I do, or how I do it. Thomas Edison dreamed of a lamp that could be operated by electricity, began where he stood to put his dream into action and despite a thousand failures, he stood by that dream until he made it a physical reality. The power of a dream! Thoreau phrased it well; ‘dreams are the touchstone of our character’. Angelo D’Amico was in agreement when he wrote that, ‘if the dream is big enough, the facts do not count.’ Napoleon Hill advises us thus, ‘Cherish your visions and dreams, as they are the blue print to your achievement.’ My dream! Carl Sandburg, the American writer and editor, best known for his poetry, said that ‘Nothing happens unless first a dream.’My dream gives meaning to my actions; it explains my activities the whole day. My dream is the painting of what I want my life to be like in all segments, whether it is in my relationships, my money, my career, my business, my talents or my spirituality. Henry David Thoreau said that ‘…if one advances confidently in the direction of his dreams, and endeavors to live the life he has imagined, he will meet with success unexpected in common hours…’ I have got to have a dream I am willing to work hard for, and fight for.When I know what I want, and how badly I want it, then I will focus on it, work towards it, and subsequently achieve it. I will never have anything until I discover what it is I want. My dream will make me passionate and positive about
  • 18. Ojijo’s Investment Clubs Manual! my goals and to do’s, and this will rub onto other people around me as they see the energy in me. Indeed, if I will move confidently in the direction of my 139 dreams, and endeavor to live the life that I dream, I will meet with the life that I imagine in common alleys. Page • The Potential To Achieve My Dream Lies In My Thought!My dream is a result of my thoughts. It is a creation of my thoughts. The Buddha said that, ‘we are what we think. All that we are arises with our thoughts. With our thoughts, we make the world’. Thoughts become things, as all that I see today, were at one time imaginations in people’s minds, imaginations which became realities. W. Clement Stone, the businessman, philanthropist and self-help book author said that ‘whatever the mind of man can conceive, it can achieve’. Our realities are a product of our thoughts.What I am today is a result of what I thought and imagined yesterday. ‘Man, alone, has the power to transform his thoughts into physical reality; man, alone, can dream and make his dreams come true’, said Napoleon Hill. Indeed, ‘an invasion of armies can be resisted, but not an idea whose time has come’, so said Victor-Marie Hugo, the French poet, playwright, novelist, essayist, visual artist, statesman and human rights activist. The strength of an idea is also reflected in the fear it had in the minds of past dictators. ‘Ideas are more powerful than guns. We would not let our enemies have guns, why should we let them have ideas.’ said Joseph Stalin, the first General Secretary of the Communist Party of the Soviet Unions Central Committee and leader of the Soviet Union after Lenin. It is in my mind, through my ideas, that the solutions to my problems shall be found. Bantu Steve Biko, the martyr and symbol of black resistance to the oppressive Apartheid regime and the founder of the Black Consciousness Movement in South Africa, noted that, ‘The most potent weapon in the hands of the oppressor is the mind of the oppressed.’ All I need is just one idea. One idea!Jakob Böhme, the German Christian mystic and theologian correctly stated that, ‘our body is the product of our own thoughts’. To gain insight and understanding of self, I have to realize and acknowledge that both negative and positive forces co-exist within me. That which I call good or evil is nothing more than a product of my own imagination. My life will unfold and evolve through thought or consciousness. The creative thinker dwells within me, forever revealing itself to me in manifested form. Henry Ford, the American founder of the Ford Motor Company and father of modern assembly lines used in mass production was right, ‘Whether I think I can or I cannot, either way I am right.’ Bryan Tracy said that ‘All successful men and women are big dreamers. They imagine what their future could be, ideal in every respect, and then they work every day toward their distant vision, that goal.’
  • 19. Ojijo’s Investment Clubs Manual!Today, I will become a no-limit person! I believe in Mark Twain, ‘it matters not the size of the dog in the fight, its the size of the fight in the dog’. I can change my life by 139 changing the way I think about my potential. Robert Nesta ‘Bob’ Marley, the Jamaican reggae singer-songwriter and musician, who spearheaded the Page Rastafarian movement to the worldwide audience, asked that we, ‘Emancipate ourselves from mental slavery. None but ourselves can free our minds.’ Bruce Lee, the great karate teacher, actor and legend, once remembered a lesson given to him by his master thus; ‘if you learn to adapt, you will never lose a fight’. Charles Darwin wrote that, ‘It’s not the strongest of the species that will survive, or the most intelligent, but the ones most responsive to change.’ And Mohandas Gandhi agreed with him that, ‘a man is but the product of his thoughts; what he thinks, he becomes.’Today, I will open new doors to unlimited possibilities and put myself on the road to a better, more fulfilling professional and personal life by thinking positive thoughts. Napoleon Hill rightly noted that, ‘more gold has been mined from the thoughts of men than has ever been taken from the earth.’ • I Will Visualize My Dream Lifestyle!‘Without a vision, a people perish’ the Bible reminds us. Today, I will visualize the dream lifestyle I want. I will close my eyes, relax, smile, and calmly visualize myself having achieved the dream of my life. I will see my goal as though it were already a reality. Dr. Norman Peale said, ‘When you visualize, you materialize’. For a minute, several minutes, I will see myself with my dream, and then the whole day today, I will talk, walk, sit and act as if I have achieved my dream. The more I do this, the more my mind gets tuned to this lifestyle, the more I develop a positive attitude, positive thoughts and positive emotions. This state of positive and vibrant and happy moods will make it easier for me to get what it is I want; to acquire what it is I need. W. Clement Stone can be quoted yet again, ‘whatever the mind of man can conceive and believe, it can achieve’. • I Will Believe In My Dream!John Stuart Mill, the great jurist and philosopher said that ‘one person with belief is equal in force to ninety-nine who only have interest’. He was right! And so was Fidel Castro, leader of the Cuban Revolution and the President of the Council of State of Cuba when he said that, ‘I began revolution with 82 men. If I had to do it again, I’d do it with 10 or 15 with absolute faith. It does not matter how small you are if you have faith and plan of action.’ Today I will believe in my dream and my goals. I will set my goals and then have faith that I am going to achieve my dream. I must believe I will achieve it, after all, I am meant to live a great and happy life; we all are meant to live great and happy lives. I will believe I can have the dream lifestyle I want, I will believe that I deserve it, and I will believe that it is possible to live a good life. Warren Buffet once said that, ‘I always knew I was going to be rich. I dont think I ever doubted it for a minute.’
  • 20. Ojijo’s Investment Clubs Manual!To believe my dream, I will set realistic, believable goals. Goals I can believe in. My dream is only my dream if I believe I am going to achieve it, otherwise, it is just a 139 wish. Eleanor Roosevelt noted this and wrote, ‘the future belongs to those who believe in the beauty of their dreams’. I will believe that I can achieve it, and I will Page believe that I deserve it.Today, I will believe that no one, not even me, knows what will happen in the next minute, no one knows whether I will be successful or not in the next venture, in my business, in my relationships, so, I will be positive and think I am going to succeed. After all, if I do not know the outcome, why suppose it will be negative? Napoleon Hill taught that, ‘no one is ready for anything until he believes he can acquire it’. The state of mind must be belief, not merely wish or hope. Belief is a powerful and important tool to achieving my dream. Adolf Hitler said that, ‘It is always more difficult to fight against faith than against knowledge.’ • I Will Write My Dream!To achieve any of my dreams, I must do the first act. The first step is to write down my dream, where I want to go. If I do not know where I am going, then any road will get me there. Writing makes things come to life. I will write the values that I need to reach my goal, the new thing that will make me achieve my goals, for instance, to be the kindest person today; to be the most time efficient person today; to be the most reliable worker today; to be the most honest person today.I will write a clear, concise statement of what it is I intend to acquire in life, the time limit for its acquisition and what I intend to give in return for it. I will list everything I need to do to achieve what I want, and then I will take action every day. This is my plan, and it will help me to acquire what it is I want. Then I will read my plan every day, aloud, when I wake up, and when I go to sleep. • I Will Define My Goals!A goal is a target I want to achieve. It is the ‘what I want to do or be’. My goal is the place I want to go to; the life I want to live; the career I want to practice; the money I want to earn; the health I want to have; and the adventure I want to experience. ‘It is not enough to do your best; you must KNOW what to do, and then do your best.’ said W. Edwards Deming, American statistician, professor, author, lecturer, and consultant. Today, I will define and describe my goals.Goals give results; and results are the main reason for any activity. I will decide what I want in my life, my dream. I will identify what I want in all aspects of my life, in my relationships, my financial status, my career, my health, my happiness and adventure, in helping someone and the ability to control the day. I will write down when I want to achieve it, and how I want to achieve it. Then I will write down the reason why I want it. I will then write down what it would feel like
  • 21. Ojijo’s Investment Clubs Manual! when I have achieved it. And after describing my dream and defining my goal, I will figure out exactly what it will take to get it. I need to be realistic so that I can 139 believe it. I will break my big plan, my big picture, my painting, into 5 year goals, 3 year goals, 2 year goals, 1 year goals, 9 month goals, 6 month goals, 3 month Page goals, one month goals, weekly goals and into daily activities for every seven days. ‘Goals allow you to control the direction of change in your favor.’ Brian Tracy said.William H. Hunsen, the eloquent poet advised that, ‘he who seeks one thing, and but none, may hope to achieve it before his life is done, but he who seeks all things must reap a barren harvest of regret’. I do not want to reap regret today.The progressive achievement of my goals, when I am working gradually, step-by- step toward something that is important to me, will generate within me a continuous feeling of success and achievement. Indeed, success is the progressive realization of predetermined goals. I will feel like a winner, and I will soon develop the psychological momentum that enables me to overcome obstacles and plough through adversity as I move toward achieving the goals that are most important to me. I will feel more positive and motivated. I will feel more in control of my own life. I will feel happier and more fulfilled. It is proven that 95% of achieving anything in life is knowing what it is that I want. ‘People with clear, written goals, accomplish far more in a shorter period of time than people without them could ever imagine.’ Brian Tracy wrote.I There are so many financial goals, and it is important to classify them in priority. The goals could be for emergency fund, or savings to buy a house, or car, or to send children to college. Either way, I should have them very clearly stated. And I should make all my financial goals S.M.A.R.T ¥ Specific-knowing exactly what I want, i.e., $1 million investment portfolio ¥ Measurable - ability to track progress ¥ Actionable- knowing the steps needed to achieve the goal, i.e., by saving and investing my money ¥ Realistic- being in the realm of possibility, i.e., $1 million is within my saving and investing abilities ¥ Timely- knowing when the goal will be achieved, i.e., 2017 • I Will Work Towards My Goals!Angelo D’Amico wrote that, ‘I will accomplish my dream of tomorrow by acting today’. My success tomorrow will be the result of my actions today. Indeed, as I do what others don’t do today, so will I have what others won’t have tomorrow. An unknown philosopher rightly said, ‘I only become what I am becoming today.’ Indeed, my success is the sum of my past experiences. Without the foundation of my
  • 22. Ojijo’s Investment Clubs Manual! yesterday, my today would be pillared on nothingness; hopeless. ‘We are what we repeatedly do. Excellence, then, is not an act, but a habit.’ said Aristotle. As was noted 139 by an anonymous writer, ‘there are two things which are most difficult to make people to do; to think and to do things in order of priority.’ PageToday, I need to meet my deadlines, my goals. I will keep in mind Parkinson’s Law, that ‘if I have only one letter to write, it will take a whole day; but if I have 20 letters to write, I will still get them done within one day.’ I can work towards and achieve my goals today. I can and I will.I will take my big dream, and break it down into smaller, more manageable goals. I will then write my goals in a time related way. Where do I want to be at the end of ten years from today? Where will I need to be in five years to be able to reach the ten year goal? What should I do by the third year, by year one, and by the half year, by the next 3 months, and what must I have done by the end of this month to reach my 10 year goal. What must I do by the end of this week, to make me reach my 10 year goal? What must I have done by the end of today to make me reach my goal?Today, in setting my daily activities, I should be reminded of the Wizard of the OZ, when Dorothy asked, ‘but how do I get to Emerald City?’ and the Good Witch of the North replied, ‘It is always best to begin at the beginning, and just follow the Yellow Brick Road.’ Dale Carnegie was right, ‘Most of the important things in the world have been accomplished by people who have kept on trying when there seemed to be no hope at all.’ The 13th century mystic must be quoted again, ‘you can only start the journey from where you are; and not where you are going’.I will set goals and posts, so that when I move closer to it, I know, and when I move away from it, I will also know. With this, nobody can stop me, nobody can slow me down, and nobody can wear me out. ‘The secret to success is constancy to my purpose’, Benjamin Disraeli, the British Prime Minister, parliamentarian, conservative statesman and literary figure wrote. And having set the major goals in my life, I will identify the first step in each. I will not forget the words of Lao- Tzu: ‘A journey of a thousand miles begins with a single step.’ Angelo D’Amico was right, ‘it you do not start, you will not finish’. I will make sure it is a very small step, perhaps taking no more than an hour to complete! Then I will start working towards my goals.I will ask myself, ‘What can I do today to get one step, however small, closer to achieving my goals?’ I will then take daily action towards my goals and dreams. Mike Murdock was right, ‘my future is hidden in what I do daily’. After all, ‘there is no such thing as something for nothing’, Napoleon Hill reminds us. The Egyptians were right, ‘There grows no wheat where there is no grain.’ I must make the first step to begin my journey of a thousand miles. Indeed, ‘a goal without an action plan is a day dream!’ writes Steve Chandler.
  • 23. Ojijo’s Investment Clubs Manual!Today, in achieving my goals, I will apply the Pareto Principle, invented by the Italian Economist, W. Pareto (also called the 80/20 principle) restated by Richard 139 Coke in his classical book, ‘The 80/20 Principle-The Secret To Success By Achieving More With Less.’ I will give 80% of my energy, time, skills and money to the 20% Page of the most important tasks, my priorities. This will give me the greatest output. Today, it will not be about how hard I work, but how smart I work. I will apply the Universal Law of ‘Planned Neglect’; to deliberately neglect everything else and only do that which will make me progress towards my success. I after all, I cannot have it all. Life is like mountain climbing; I must leave behind all unnecessary weight and only carry the equipment necessary for the climb. The Pareto Principle is about prioritizing my goals. I will prioritize my goals today. To achieve my goals, I must learn to say NO to the GOOD in order to say YES to the BEST. Robert J. McKain wrote, ‘The reason most major goals are never achieved is that we spend our time on the second best things first.’To achieve my goals, I will do one thing at a time. The worlds greatest achievements were made by people who gave the task in front of them their undivided attention. I will ask myself, ‘Is giving each task 30% of my attention for three hours as effective as giving each task 100% of my attention for one hour each?’ If something does not deserve my undivided attention, maybe it is not worth doing at all. I will set goals that exploit my strengths and minimize my weaknesses. This will allow me to realize and make full use of my opportunities, and control the threats I face.Then I will create benchmarks or milestones that I can use to measure my progress and know whether I am on track, off-track or not moving at all: stagnating.Today, I will decide what to do and do it, and decide what not to do, and not do it. Taking action or conation towards our goals is considered to be one of the four divisions of the mind, according to Sir William Rowan Hamilton, the Irish physicist, astronomer, mathematician and the father of electromagnetism and quantum mechanics. The other one being desire and volition, and the other two being perception and feeling. This active mentality differs from velleity, the wish without the effort. The Taking Action part of the mind is the part of our mind that says, ‘I Will’. ‘I will’ is more important than intelligence. ‘I will’ is more a driving force than ‘I wish.’ ‘I will’ is a distinct aspect of the mind - the power of creative instinct or will – it is separate from thinking and feeling. I will quote Mohammed Ali, the king of boxing; ‘The Champions need the skill and the will. But the will must be stronger than the skill.’This active mentality, the ‘I Will’, was accepted as a given by thinkers such as Plato, Aristotle, Augustine, Spinoza, Hobbes, Descartes, Kant, Hume, Freud, and Piaget. It is the ‘executive’ brain. It is the source of all striving, longing, ambition, and self-expression. It is the root of a persons persistence against obstacles, the very essence of the person, for it is through conation that we strive toward goals
  • 24. Ojijo’s Investment Clubs Manual! or self-actualize. Fidel Castro captured this essence when he wrote that, ‘If Mohammed cant go to the mountain, the mountain will go to Mohammed.’ And it is 139 through this active mentality that one is productive, for as Hume pointed out, ‘intellectual awareness alone cannot move us to do anything’. PageThe power of the human will was embraced by Joseph Vissarionovich Stalin, the Soviet politician, head of state and first General Secretary of the Communist Party of the Soviet Union, who launched a period of rapid industrialization, when he told his soldiers that, ‘I believe in one thing only, the power of human will.’ • I Will Get A Dream Team!Lyndon Baines Johnson, the 36th President of the United States, often referred to as LBJ, was quoted as saying, ‘There is no problem that we cannot solve together, and very few that we can solve alone by ourselves’. Team support is very important in achieving our dreams. TEAM means Together Each Achieves More. ‘When two people walk together, they can go a long while.’ The Luo of Kenya believe. And ‘When two people sleep together, they give each other warmth.’ The Bible says. The Swedes believe that ‘Shared joy is a double joy; shared sorrow is half a sorrow.’ This is true! I will get a dream team, a support team.This dream team will help me be in line, keep me in check and always ask after my progress. The dream team will be my boards-of-advisor who will help me gather intelligence required to help me reach my dream. This is the team that will ask me about my progress with my dream. They will ask me where I am, what I did today, whether or not I woke up early, and if or not I read about my books on career, role models, and industry leaders. They will help me reach where I want to go, encourage me, push me, pull me and tell me I will do it, because as my dream team, they believe in me. From time immemorial, the Turks have believed that, ‘no road is long with good company’. The dream team will fight for me when I am down and low. Ernesto Che Guevara, an Argentine Marxist revolutionary, physician, author, intellectual, guerrilla leader, diplomat, military theorist, and major figure of the Cuban Revolution captured the essence of the team when he wrote in his diaries that, ‘I dont care if I fall as long as someone else picks up my gun and keeps on shooting.’The team can be the models in my field, and from them I will learn how they did it, what they did and when they did it. From them I will know the books they read. The team may be my fiancée, my friends, my family, or my colleagues from high school or college, my colleagues at work or in my club. The team must be people with whom I share the same desire to prosper. The team will make sure I do not remain down when I fall.The dream team is premised on the ‘mastermind principle’; that ‘two minds are better than one’. This is soundly described in the classic Think and Grow Rich by
  • 25. Ojijo’s Investment Clubs Manual! Napoleon Hill. A Luo proverb says, ‘Alone a youth runs fast, with an elder slow, but together they go far.’ 139It is possible for a group of two or more people to cooperate in such a way that the Page productivity of each enhances the productivity of the other. The Bible is right, ‘A rope of two cords is stronger than that of one cord’. In the team I will find security of thought and action. The Quran teaches that ‘there is safety in the multitude of advisors.’ A group can be capable of more output than any individual within the group; than me. This team will not be an easy crowd. Rather, it will be a group with high expectations for me and from whom there will be high demands to perform exceedingly well. The Bible beautifully captures the importance of harmony in the team thus; ‘can two walk together unless they agree?’My dream team will have a lawyer for all my legal needs, especially incorporating my investment vehicle; a financial investments adviser to advice on financial investment issues; a fixed assets broker for realty and other fixed assets; an accountant for my tax planning; and a sales and marketing expert to connect me to the world of clients and customers.My team must be people who mind their own businesses. All my professional advisers must be people who have excelled in their own lives, financially free people or people on their path to financial success. As the old adage goes, ‘a blind man cannot lead a blind man.’ I want advisers who are not only preaching wine, but also drinking it. I want advisers who are minding their own businesses. These professionals are my eyes and ears in the market place. They are there every day so I do not have to be there. After all, as Robert Kiyosaki says, ‘I would rather play golf.’Getting the right professionals will not be easy. The fairy tale shall be a good inspiration for me, ‘I will kiss several frogs before I get my prince.’ When Henry Ross Perot was building his computer company, he hired the best people he could find, and his motto was, ‘Eagles don’t flock. You have to find them, one by one.’ • Principle 2: Budgeting!Budgeting helps me to plan my finances: To become rich, I must budget. Budgeting lies at the foundation of every financial plan. It does not matter if I am living paycheck to paycheck or earning six-figures a year, I need to know where my money is going if I want to have a handle on my finances. Unlike what most people might believe, budgeting is not all about restricting what I spend money on and cutting out all the fun in my life. Budgeting is understanding how much money I have, where it goes, and then planning how to best allocate the money. ‘A budget tells me what I cannot afford, but it does not keep me from buying It.’ said William Feather, the American publisher and author.
  • 26. Ojijo’s Investment Clubs Manual!Budgeting helps to save: Budgeting is vital to any savings strategy. It helps me to identify where my money is going. Wasteful consumption patterns can be 139 controlled through successful budgeting. PageBudgeting needs financial IQ: To draw up a good budget, I need to understand some basics of financial management. This knowledge is called financial intelligence, or financial IQ, and it will be the foundation of my financial success. The basics of financial management can be grouped into four 4 categories as below: ¥ Income - This is the money that flows into my hands. My revenue sources consist of my salary, my wage, investment income, and all other money that people give me as gifts or payment/consideration for work done. ¥ Expenses - This is the money that flows out. My expenses consist of taxes, housing expenses including utilities, transportation, food, clothing, insurance, health-related expenses, entertainment, etc. ¥ Assets - These are moneys that I own in various shapes and forms. My assets include my house, cars, savings, investments, and other items of value. ¥ Liabilities- This is money that I owe to other people. My liabilities include my home mortgage, car loans, and credit card debt.Then I also need to understand how to analyse my financial life and determine if I am living precariously, or living like an investor. For this, I need to know the difference between good cash flow and bad cash flow. ¥ Good Cash Flow - If I manage my money well, i.e., keep my revenue higher than expenses - I will have excess cash. I can save this money and buy more assets that can appreciate and generate more income. ¥ Bad Cash Flow - If I do not manage my money well, i.e., my expenses exceed my revenue -I will add to my debt, or have to sell some assets to cover the expenses. Either case, I am eroding my wealth and its growth potential.Budgeting needs a budget: And finally, the hardest part of creating a budget is sitting down and actually creating one. When I budget, I am spending on paper, on purpose, before the month begins. When I am spending my money on purpose, I will be on my way to financial freedom. ‘The way to wealth is as plain as the way to market. It depends chiefly on two words, industry and frugality.’ said Benjamin Franklin, one of the Founding Fathers of the United States, a noted polymath, leading author and printer, satirist, political theorist, politician, postmaster, scientist, inventor, civic activist, statesman, and diplomat.To live within my means is dignity. Francis Moore, the American author of 18 books and co-founder of three national organizations that explore the roots of hunger, poverty and environmental crises, wrote that, ‘The most substantial people are the most frugal, and make the least show, and live at the least expense.’ Budgets are plans. Budgeting is planning. Budget planning entails identifying the sources of income and taking into account all current and future expenses, with an aim to meet
  • 27. Ojijo’s Investment Clubs Manual! financial goals. The primary aim of a budget planner is to ensure savings after the allocation for spending. It allocates future personal income towards expenses, 139 savings and debt repayment. There are several methods, plans and tools available for creating, using and adjusting a personal budget. PageThe Ojijo 10% Budget Plan: To create a budget, I will use The Ojijo 10% Budget Plan. The Ojijo 10% Budget Plan gives me guidelines of how to allocate the amount of revenue I have, after removing taxes, expenses and the other costs of getting the revenue, including kick-backs, commissions, interests, etc. The Ojijo 10% Budget Plan requires that I divide my revenue into TEN equal and separate areas, which all get 10% of the revenue allocation. The equality is premised on the fact that all parts of my daily living are equally important.The Ojijo 10% Budget Plan 1. Giving to help the needy, whether directly or indirectly; as tithe or charity; or through the church, mosque, temple or any charity organization like Red Cross, etc.; 2. Rent & Utilities, including security & gardeners, mortgage, home insurance, lease, etc; 3. Saving-2-Invest in various assets; 4. Entertainment, including vacations, gifts, club membership fees, hobbies, etc; 5. Education, both personal and for children, including seminars, talent development programs and education insurance plan, etc; 6. Food & Kitchen appliances and wares, including chefs, utensils, etc; 7. Transport & Communication, including vehicle insurance payments; 8. Clothes & Personal Hygiene, including leg wear, sprays, jewellery and bathing items, etc; 9. Household & House Maintenance, including house help expenses, furniture and fixtures; 10. Emergency & Insurance Fund, which should be able to take me for up to 3 months from the day I lose my source of income. This amount is the sum of all the ten percents (10%) for numbers 1-9, multiplied by three months. The Standard Is Rent. So, if my rent is USD$ 500, then all the other costs will be equally USD$ 500 each, and hence the emergency fund shall be USD$500*9*3 (months), hence, USD$ 13,500. Part of the emergency fund shall also be the payment for health and life insurance, since disease can and will strike at anytime; and death, however certain, is always an emergency.The rule of thumb is that any excess money that remains from any of the categories will be added to category 3 and invested to make me financially independent.
  • 28. Ojijo’s Investment Clubs Manual! • Principle 3: Saving-2-Invest! 139How do I start investing money? By saving! The key to investing is savings. An effective savings strategy coupled with a smart investing strategy will help me to Page meet my financial goals. Every dollar saved now helps me to control my current consumption by which the size of the income that I think will be required for retirement is lowered. Also, through the power of annual compounding, it increases the size of the nest egg I will have for retirement.I should save 10%. Using an automatic payment plan, I can save and invest 10% of my paycheck every month. Today, out of every amount of money I earn, I will save 10% and invest it. Saving what I earn is the first step to acquiring assets. In his masterpiece, The Richest Man in Babylon, George Clason, the soldier, businessman and writer, advises income earners thus; ‘pay myself first.’ To save is to pay myself. Savings are used to create more money, not to pay bills. Benjamin Franklin, one of the Founding Fathers of the United States and a noted polymath, a leading author and printer, satirist, political theorist, politician, scientist, inventor, civic activist, statesman, soldier, and diplomat was right, ‘A penny saved is a penny earned.’ This is one area where the Universal Law of Accumulation works. Saving and investing means that I invest my money. I should be wary of borrowing money to invest. I must invest my own money. I should remember the wise words of legendary investor Warren Buffet, ‘If me don’t have it, don’t invest it.’ The simple truth is that those who borrow almost always pay a higher rate of interest than the rate received by those who save.To pay myself first, I will find out from my employer whether I can direct my paycheck to different accounts. If I do not have such a service, I can set up an account that will take the money automatically out of my checking account each month. I will let the amount be directed to an investment account. This is re- enforced savings which implies I save first and spend the rest from my paycheck. My goal should be to save at least 10% of my total before tax earnings. This should be the minimum. Most millionaires live far below their means as they are disciplined and highly focused on their financial goals from the beginning. They are millionaires because they have decided to be so.I need discipline to save: To achieve any goal in life, one needs to be disciplined. Similarly, saving to invest requires discipline. A disciplined approach helps me to remain focused on my financial goals. I will formulate a plan and review it periodically to ensure that I am on the right track. I will conduct a careful study of my consumption patterns. I will then identify items of expenditures that I can do without or explore opportunities to reduce my costs without unduly sacrificing the item. And then I will divert any cash savings automatically to an investment account.
  • 29. Ojijo’s Investment Clubs Manual! • Principle 4: Long Term Investing! 139‘Always invest in the long-term’, Warren Buffet advises. I need to invest long term. I should not be influenced by short-term fluctuations. These are inevitable in all Page economies as well as businesses experience the boom and bust cycle. I should not try to time the market. I need to get in and stay in. I should review my plan periodically, and whenever my needs or circumstances change. If I am not confident that my plan makes sense, I will talk to an investment advisor or someone I trust. A long-term view helps me to safely invest in riskier investments, such as stocks, which the market rewards in general. This requires patience and discipline, but it increases returns. This approach reduces my choices to two: stocks and stock mutual funds. In the long run, they are the winners. The additional risk is worth it due to the power of compounding. 10% a year for 20 years is 570%, but 7% a year for 20 years is only 280%. I should not procrastinate.I should begin now because an early start can make all the difference. An early start provides a long time horizon for compounding to show its true benefit for the investor. For average people, investing is not so much a helpful tool as the only way they can retire and maintain their present lifestyle. By investing long term, I am planning ahead. By planning ahead I can ensure financial stability during my retirement. ‘It never was my thinking that made the big money for me. It was always my sitting. My sitting tight!’ said Edwin Lefevre. This blunt warning is treated by many financial advisers like the Bible. Once I arrange my assets into my ideal allocation, I should not tinker.I will rebalance once a year to keep my mix on track, but otherwise, listen to Livermore and sit tight. I will remember that even if the market tanks it always recovers for long term investors, and when it is low I will snatch up a lot of shares at bargain prices. As long as I am dollar-cost averaging I will always be buying shares at a cheaper price.The market can remain irrational longer than I can remain solvent. Bubbles occur. However, investors should never attempt to short them because, while bubbles eventually burst, they can grow larger and last longer than investor resources. This requires patience and discipline, but it increases returns. The additional risk is worth it due to the power of compounding. To invest long term, I should not procrastinate. I should begin now because an early start makes all the difference. An early start provides a long time horizon for compounding to show its true benefit for the investor.Further, I should invest long term since the liquidation value (if I said, get me out of this Club and give me my money back), I will often get less than my original capital contributions during the first two years. That is to say, investing in the stock
  • 30. Ojijo’s Investment Clubs Manual! market is a long-term proposition, and I may only see my contribution increase in value after the second year or so of investing. 139 Page • Principle 5: Portfolio Diversification!Portfolio diversification is the golden rule of successful investment: This simple strategy is overlooked by 85% of investors. Diversification is a fundamental aspect of financial planning. In a nutshell, it is the old adage to not put all my eggs in one basket. If I have all my eggs in one basket and something happens to the basket then I am in big trouble. But instead, let me say I keep some of my eggs in the refrigerator. Then if something happens to the eggs in the basket I still have the ones in the refrigerator. The practice of diversification says that I should have a little in each of these to diversify myself against risk of the stock market and whatever else might happen in life.I will diversify - by company, by industry, by company size and by geography. In stocks and bonds, there is safety in numbers. No matter how careful I am, I can neither predict nor control the future. So I must diversify. “In stocks and bonds, as in much else, there is safety in numbers.” If I own the right number of stocks, bonds and funds and they are allocated across several categories, industries and geographies, I can substantially lower the risk of losses to our portfolio and increase returns at the same time. If I diversify properly; I can lower risk AND improve returns at the same time, making this a no-brainer. Diversification is the process of finding the investing sweet spot where I can optimize risk vs. return.Diversification is about mixing: Another critical piece is the diversification mix. I want to invest in a wide variety of industries, categories and geographies to ensure that when one specific area goes south, it does not tank my whole portfolio. My portfolio should be spread across a wide variety of categories and geographies, most of which will not correlate at all with anything going on in telecom, some may even be inversely correlated (meaning they do well when telecoms do poorly).For example, if I own a telecom and suddenly the industry is getting bad press due toinvasion of privacy lawsuits, the rest of our portfolio can cover the losses of that stock. Why?If were diversified, that is probably our only telecom investments, the rest are in unrelatedindustries and will not be directly affected by these lawsuits.Diversification is about diverse asset allocation: As an investor, I should have a diverse asset allocation. This means I spread my money between various types of investments, not buying only stocks, bonds or funds, but buying a combination. Portfolios should include allocations to the asset classes of large-cap and small- cap stocks, value and growth stocks, real state, international developed markets,
  • 31. Ojijo’s Investment Clubs Manual! emerging markets, and the appropriate amount of bonds. Diversification is the closest thing to a free lunch there is in investing. To make the alchemy work, I 139 must load up on assets whose up and down cycles do not run in sync: stocks (local and foreign, as well as large-company and small), bonds (of varying Page maturities), cash, real estate and commodities. Investment centers on diversification.Different securities perform differently at any point in time, so with a mix of asset types, my entire portfolio does not suffer the impact of a decline of any one security. When my stocks go down, I may still have the stability of the bonds in my portfolio. Diversification is always working. The reason I want a blend is because each type of investment behaves very differently. The rule of thumb is that the further I am from retirement the more I should allocate to more aggressive investments like stocks, and the closer I am to retirement the more I should allocate to shorter term lower risk investments like bonds. Stocks, for example, have the highest potential return of any type of investment but they also have the highest risk of losses. Bonds, on the other hand, cannot provide the types of returns a stock can but they offer stability since their returns are often guaranteed. A blend of different asset classes is just another way to diversify and I can choose from a wide variety of allocations.Diversification reduces risk: Diversification is important. If I spread my investments across various types of assets and markets, I will reduce the risk of catastrophic financial losses. Diversifying investments in a portfolio helps to manage risk. The safest port in a sea of uncertainty is diversification. As most successful investors will tell me, diversification is king. A diversified portfolio not only reduces unwanted risk, but also contributes to a winning portfolio. And having a well-diversified portfolio does not necessarily mean just buying more than one stock; branching out into other areas of investment could be a viable alternative.‘It is the part of a wise man to keep himself today for tomorrow and not to venture all his eggs in one basket.’ said Miguel de Cervantes. Nothing can break the law of risk and reward, but a diversified portfolio can bend it. When I spread my money properly among different asset types, a rise in some will offset a fall in others, muting our overall risk without a commensurate drop in return. Diversification reduces risk without reducing expected returns. Once investors diversify beyond popular indexes, they will be faced with periods when popular benchmark indexes outperform their portfolio. The strategy to get rich is entirely different than the strategy to stay rich. One gets rich through inheritance or by taking risk. One stays rich by minimizing risk, diversifying and not spending too much.To diversity, I need a portfolio.
  • 32. Ojijo’s Investment Clubs Manual! PORTFOLIO: A combination of different investment assets mixed and matched for the purpose of achieving an investors goal(s). 139Items that are considered a part of my portfolio can range from real items such as art Page and real estate, to equities, fixed-income instruments and their cash and equivalents. There is not just one strategy that can be used to invest successfully. Ideally an investment portfolio should have both equity and debt instruments. Using this guideline I can allocate my money as best fits my personal situation. This strategy does not even rely on my ability to pick stocks. It relies on the principle of diversification. I should divide my money between these types of investments.Risk of non-diversification: There are horror stories of people losing all their money on the stock market. The main reason this happens is that people do not place their money in a variety of investments. Doing this spreads the risk of losing my money. I will not be the person who complains about how I lost all my money on the stock market. I will be one of the success stories who knows how the market works and how I make money, by having a diversified portfolio, focused on the long-term. Even if I love shares, I should not buy only stock in one asset class like utilities or banks or tech stocks. Industry stock prices move together so when one bank stock goes down the others all go down too. Most investors are comfortable allotting all their money to one investment. If that stock goes up, great; if not they are back at square one. I should diversify against risk. If I follow a diversified investment plan I reduce my overall risk as compared to being invested in only one type of security. Diversification will help offset the volatility I may have with stocks. If my stocks go up then I realize larger overall gains. • Principle 6: Dollar Cost Averaging!Dollar cost averaging is buying at intervals: Dollar cost averaging is a technique by which an investor divides the given investment over a period of time and invests that amount on a regular basis as opposed to buying in all at once. When an investor buys the same stock or mutual fund at regular intervals and with a fixed amount, he or she is said to be using the dollar cost averaging method. If the market price of the selected stock or mutual fund declines, the investor will buy a greater number of shares. On the other hand, when the market price of the selected stock or mutual fund increases, the investor will buy lesser number of shares.Dollar cost averaging reduces risk of price fluctuations: By putting in, say, $100 each month (rather than a large amount once a year), I sometimes buy when the prices of the units of the fund are higher, and sometimes when prices are lower. In the end, the purchase prices average out. I can hence reduce some of the risk that poor timing and potentially adverse price fluctuations will have on my
  • 33. Ojijo’s Investment Clubs Manual! investment decisions. Just about any fund company or bank will let me invest like this with an automatic payment plan. However, dollar cost averaging will not 139 protect me in a steadily declining market. Further, if I discontinue with a dollar cost averaging plan, I will lose money when the market value is less than cost of Page the shares.Dollar cost averaging encourages automatic savings: The best thing about dollar cost averaging is that it gets me into the habit of saving every single month. Dollar cost averaging permits systematic contributions to an investment portfolio periodically, hence encouraging savings Dollar-averaging (continuing to invest the same amount of money every month) really works.This investing strategy will, over a period of time, result in the investor buying the selected stock or mutual fund at an average cost per share that will be less than the average price per share. For example, assuming that a person invests $100 per month for 12 months in a Mutual Fund; as can be seen from the below table, the average cost per share is lower than the average price per share.Month Dollars Invested Price per share No. of shares purchasedJanuary 100 12.76 7.84February 100 13.25 7.55March 100 15.25 6.56April 100 18.76 5.33May 100 20.26 4.94June 100 18.85 5.31July 100 15.62 6.40August 100 17.85 5.60September 100 16.62 6.02October 100 13.26 7.54November 100 14.5 6.90December 100 16.76 5.97Total 1,200 193.74 75.94Average price per share = 193.74/12 = $ 16.15Average cost per share = 1,200/75.94 = $ 15.80 • Principle 7: Risk Tolerance!Risk is a necessary element of life. There is always the chance that something will not work out for me and this chance is called risk. There is a risk in everything I choose to do in life including my financial life. The holder of any debt is subject
  • 34. Ojijo’s Investment Clubs Manual! to interest rate risk and credit risk, inflationary risk, currency risk, duration risk, convexity risk, repayment of principal risk, streaming income risk, liquidity risk, default 139 risk, maturity risk, reinvestment risk, market risk, political risk, and taxation adjustment risk. The broad range of investment opportunities represents varied levels of risks Page and rewards. Success in financial investment requires good knowledge of investing and underlying risks. It is important to understand risk from a wealth perspective because I am rewarded for taking risks. History unequivocally supports this "no free lunch" principle. Stocks (high risk) have paid more than government bonds (medium risk), which in turn have beaten low-risk Treasury bills. Among many, many other things, this law suggests that to earn returns high enough to build true wealth, I have to put some of my money in risky assets like stocks-the only investment to handily beat inflation over time.The greater the risk I take, the greater the reward I will receive. This applies to investments but also to life decisions. In the financial world this is illustrated when I choose to invest in a stock over a safer investment. The extra risk I take is rewarded in terms of the stocks growth. In our personal world this is illustrated in a decision to attend college. Attending college is essentially a case of one assuming a risk. I am foregoing years of income for the chance that the increased education will pay off for me in more income in the long run. This is actually a pretty safe investment that usually works. o Types of RiskDepending on the nature of the investment, the type of investment risk will vary. € INCOME RISK: The possibility that a portfolios dividends will decline as a result of falling interest rates. Income risk is generally greatest for money market instruments and short-term bonds, and least for long-term bonds. € INFLATION RISK: The possibility that increases in the cost of living will reduce or eliminate the returns on a particular investment. € MARKET RISK: The possibility that stock or bond prices overall will decline over short or even extended periods. Stock and bond markets tend to move in cycles, with periods of rising prices and periods of falling prices. € INTEREST RATE RISK: Interest rate is the amount charged for borrowing money. The interest rates may go up or down and hence affect my capital or profit. This is a risk. € CAPITAL RISK: A common concern with any investment is that I may lose the money I invest - my capital. This risk is therefore often referred to as capital risk. € CURRENCY RISK: If the assets I invest in are held in another currency there is a risk that currency movements alone may affect the value. This is referred to as currency risk. € LIQUIDITY RISK: Many forms of investment may not be readily salable on the open market (e.g. commercial property) or the market has a small capacity and
  • 35. Ojijo’s Investment Clubs Manual! investments may take time to sell. Assets that are easily sold are termed liquid therefore this type of risk is termed liquidity risk. 139 o Risk Reduction PageSince there is imminent risk in entrepreneurship, every entrepreneur should take risk reduction measures. I can do this by applying various strategies: • ExperimentingThe first strategy is to experiment. This involves taking action through a series of low cost events and projects before committing a great deal of resources (time, energy, skills and money). • Risk SharingRisk sharing risk by partnership with individuals or corporations that have complementary skills will increase the chance of success while reducing the risk in terms of time, skills, money and energy that is required. • Determining Attitude towards RiskI should also determine my attitude toward risk. After I decide my attitude toward risk, it makes my planning easier. It allows me to tailor how I intend to become prosperous; hare or tortoise pace. My attitude will determine how I respond to the risks of life. Life in itself is risky, and nothing is certain. How do I cope when things go wrong? Am I positive, dynamic, enthusiastic, and up? Or do I get all gloomy and depressed and sees the glass as half empty? I will encourage myself to know myself, and know how I can cope and how to respond to changes. And I should remember that risk does not mean bad. It means I do not know how it will all turn out. I should consider how much stress and excitement I can handle.As an investor, I can learn a lot from the famous Greek maxim inscribed on the Temple of Apollos Oracle at Delphi: "Know Thyself". In the context of investing, the wise words of the oracle emphasize that success depends on ensuring that my investment strategy fits my personal characteristics. Fundamentally, there are two types of personalities regarding risk. Knowing which personality best suits me is an important step in managing my investment portfolio properly. ¥ Risk-Taker -The risk taker lives for the thrill and loves to take chances. I am this person if I am perfectly comfortable in the high-risk world of options or foreign securities where the prices fluctuate by the hour. As this type of investor, I am at the greatest risk to lose my money because of a poor investment. Therefore, if this is my type then I need to make sure and re- evaluate my investment choices or get a second opinion from a third party. Risk takers find an extra thrill in taking risk. They are likely to indulge in
  • 36. Ojijo’s Investment Clubs Manual! gambling, the lottery and dangerous activities such as sky diving or driving fast. They thrive on the element of danger and risk involved in 139 their activities. They love the extra adrenaline rush from pursuing these activities. This personality type needs to learn to embrace safer Page investments and safer lifestyle options for at least some of the time. The risk taker employs an Aggressive Investment Strategy. Aggressive investment strategies are those that shoot for the highest possible return. They are most appropriate for investors who, for the sake of this potential high return, have a high risk tolerance (can stomach wide fluctuations in value) and a longer time horizon. Aggressive portfolios generally have a higher investment in equities. An aggressive portfolio may consist of 75% equities and 20% bonds and 5% cash equivalents. ¥ Risk-Avoider- The risk avoider always looks for things to not turn out good and is most likely to say, “I cannot trust anybody!” As this investor I am most likely to miss out on returns and end up with the same money I started with. If I am this type then I need to take a look and see if maybe I am allocating a bit too much money in bonds, money markets or other fairly safe and liquid investments. The conservative never takes risks. I am unable to ever experience true wealth or any other rewards that are associated with taking risks. The risk avoider employs Conservative/Passive Investment Strategy: The conservative investment strategies puts safety at a high priority and is most appropriate for investors who are risk averse and have a shorter time horizon. Conservative portfolios will generally consist mainly of cash and cash equivalents, or high-quality fixed-income instruments. The main goal of a conservative portfolio strategy is to maintain the real value of the portfolio, or to protect the value of the portfolio against inflation. The portfolio here would yield a high amount of current income from the bonds and would also yield long-term capital growth potential from the investment in high quality equities. A conservative portfolio would consist of approximately 50% equities, 40% bonds, 10% cash and equivalents. A passive investor has no desire to try to beat the market. Instead, relying on the stock markets history of increasing over the long term, the passive investor, believing that trying to beat the market is too much work or even futile, will simply purchase a security such as an index fund, which mirrors a benchmark used to track the performance of a market. The index fund as founded by the legendary John Bogle, founder of the Vanguard Group and creator of the index mutual fund.It is very important for an investor to embrace some forms of risk and accept them as a necessary element on the road to wealth. If one always plays it safe then one will never find great rewards. ‘He that is overcautious will accomplish little.’ said
  • 37. Ojijo’s Investment Clubs Manual! Friedrich von Schiller. Since I only live once it is worth it to take some risks in life. Sometimes these pay off in big ways. Again a third party can often help me in 139 being objective in my evaluation. Page • Risk Should Be Proportional To Available Disposable Income.The golden rule surrounding all investing is: I should not spend more than I can afford to lose. This is the absolute truth. The stock market, or any other investment, is not a sure thing. It never will be, or else what would be the point of bothering to track businesses? If I have some spare cash that I can spend if need be, then by all means I should- this way, I can learn about the stock market and have the potential to increase my wealth. As a general rule in risk taking, I should not take more risk than ability, willingness or need dictates. I should take risk with money I can afford to lose.I need to work out the percentage of my wealth I am prepared to risk. The more I have got, the smaller the risk might be - unless I am prepared to lose the ranch, of course.Plans fail because investors take excessive risks. The risks unexpectedly show up and the plan is abandoned. When developing a plan, investors should consider their investment horizon, stability of income, ability to tolerate losses and the required rate of return. I should never invest in any security without fully understanding the nature of all of the risks. If investors cannot explain the risks to their friends, they should not invest.I should ask myself if I can live with the outcome, regardless of how small of a chance there is of the outcome occurring. And I should avoid working with commission-based advisors. Commissions create the potential for biased advice. I should only work with advisors who will provide a fiduciary standard of care. This is the only way to ensure that the advice provided is in my best interest. There is no reason not to insist on a fiduciary standard. • Risk should depend on my investment objectives.People invest in different vehicles or jurisdictions for various reasons. The two main investment objectives are income generation and capital appreciation. These factors should influence an investment decision since they inform the amount of risk an investor can take. These and other objectives, such as tax sheltering, change throughout my entire life. Capital appreciation may be more important for me as
  • 38. Ojijo’s Investment Clubs Manual! a young investor, but once I enter my golden years, I may place a greater emphasis on gaining income. 139 • Risk should be based on my financial Page position.As multi-millionaire, in an effort to increase my profit for the year; I may have no problem putting down $100,000 in a speculative real estate investment. To me, a hundred grand is a small percentage of my overall worth. Meanwhile, as a newlywed couple concentrating on saving up for a down payment on a house, we cannot afford to risk losing our money in a speculative venture and regardless of the potential returns of a risky investment, speculation is just not appropriate for the young couple. • Risk should be based on my age.A 75-year-old widow living off of her retirement portfolio needs income from her investments to survive, she cannot risk losing her investment. A 35 year old young executive, on the other hand, has time on his or her side. As investment income is not currently paying the bills, the executive can afford to be more aggressive in his or her investing strategies. As a general rule, the shorter my time horizon, the more conservative I should be. For instance, if I am investing primarily for retirement and I am still in my 20s, I still have plenty of time to make up for any losses I might incur along the way. At the same time, if I start when I am young, I do not have to put huge chunks of my paycheck away every month because I have the power of compounding on my side. On the other hand, if I am about to retire, it is very important that I either safeguard or increase the money I have accumulated. Because I will soon be accessing my investments, I do not want to expose all of my money to volatility - I do not want to risk losing my investment money in a market slump right before I need to start accessing my assets. We cope better with risk the younger we are. Further, if I have family commitments, then I do not want to risk his capital, and hence will be more risk averse in his deals. I will look for income rather than growth. • Diversification Mitigates RiskWhatever my personality type, I need to make myself aware of how I approach risk in the different areas of my life. I will then use the approach of diversification to mitigate the risk I am assuming and then make some well-placed investments that are riskier than the others. I will then be compensated for the extra risk I undertake. This is called taking calculated risks: The returns I get are proportionate to the risk I take. This is a fundamental law of the markets. It is why five-year CDs typically pay more than six-month ones and why I am disappointed if my emerging markets fund does no better than its stodgy blue-chip stablemate.
  • 39. Ojijo’s Investment Clubs Manual! • Knowledge Mitigates Risk 139The more extensive my knowledge of what has been done, the greater will be my power of knowing what (not) to do. ‘As a general rule, the most successful man in life Page is the man who has the best information.’ said Benjamin Disraeli. All knowledge is built from previous knowledge. As an investor, I should learn something new about financial investments every day, a new way of analyzing companies, a new way of calculating risks, a new way of portfolio allocation and mixing. I must read the technical journals which will keep me abreast of the field and career. I should build my knowledge base to help me in achieving financial independence. Whether it takes a week, a month or a year to become thoroughly knowledgeable, it does not matter. I should start learning immediately, today. This is an area where the Universal Law of accumulation is important; that any body of knowledge is a result of hundreds, perhaps thousands, of small pieces of information. Investing is a big bet on an unknowable future. The mark of wisdom is accepting just how unknowable it is. Granted, that is not easy. Confucius said centuries past that, ‘When I do not know a thing, to allow that I do not know it-this is knowledge.’ I should accept I need to learn, and then learn. This will reduce the risk of venturing into this unknowable future. Think about how much information I have! Too little increases risk. • Principle 8: Knowledge-Based Investing!I need to be an informed investor: Investing is the key to building wealth, but investing in and of itself is not enough. If I have to invest, I need to invest wisely! I do not need to be a financial expert to invest, but I do need to learn some basic terminology and concepts so that I am better equipped to make informed decisions. This is what this guide is all about. Investment is not speculation. Investment is informed speculation. My goal is to be informed enough to understand and analyze what I hear. Then I can decide what fits with my investing personality. When asked how he managed to become a rich investor, Warren Buffet said, “we read hundreds and hundreds of reports every year.”The poor reading culture about money is why only 1% of the population is rich. I must join this small percentage that buys books and reads about being rich. I will read about shares, stocks and stock options. I will read about securities and special funds. I will read about investing in fixed assets and securities, including government securities. If I want to fly an airplane, and land safely, I have to learn how to fly planes before I get to the cockpit. As the Gilded Age publisher Henry Holt once observed, ‘a book is a thing by itself. There is nothing like it, as one shoe is like another, or as one kind of whiskey is like another.’ Charlie ‘Tremendous’ Jones was precise; ‘I am a combination of the books I read and the people I meet’. Robert Kiyosaki confirms it by teaching me in his classical book, Rich Dad, Poor Dad, that, ‘I am what I eat, but I become what I study.’ Read in order to live. wrote Henry Fielding. Indeed, as a
  • 40. Ojijo’s Investment Clubs Manual! writer, the more I read, the better I write. Dr. Seuss writes that, ‘The more that I read, the more things I will know and the more places I will go.’ I will do myself a lifelong 139 favor if I keep reading! Page‘Education is the passport to the future, for tomorrow belongs to those who prepare for it today.’ wrote Malcolm X. A lawyer friend of mine from Uganda, Edith Ojiambo, loved Literature so much that when she was studying for her A-Level examinations she wrote on the cover of her literature notebook, ‘Because I love I, I will always keep in touch’. True knowledge cannot be gained in things in which I have no passion. ‘Man is only great when he acts from passion.’ wrote Benjamin Disraeli. I need to love investing in financial instruments and stocks to be able to seek and acquire knowledge about it anytime, in anyway. The English philosopher, scientist and lawyer, who served both as Attorney General and Lord Chancellor of England, Francis Bacon, agreed with him in his famous aphorism that ‘Knowledge is Power.’ The Quran commands the Ummah, Iqra!, meaning, ‘Read’. The Bible confirms that ‘people perish because of lack of knowledge.’It is now proven, both scientifically and historically, through innovation and creativity, industrialization and technological advances, that one hundred percent of human potential is a result of proper education.Robert Kiyosaki wrote that ‘It is not what I know that counts; it is how fast I learn that matters.’ This is true because in the information age, what I know today becomes obsolete knowledge tomorrow. As a club, I should seek new knowledge in financial instrument and stock market. Plato, the Classical Greek philosopher, mathematician, writer of philosophical dialogues, and founder of the Academy in Athens, the first institution of higher learning in the western world, noted that ‘Knowledge is food of the soul’. I will seek to know the latest trends in carrying out my professional work. I should know the technological advances and applications of ICT and related technologies in financial investing.I should subscribe to print and online e-zines, e-newsletters and web updates to keep myself informed of the latest knowledge in my field. I should attend seminars, workshops and conferences to learn the latest knowledge in financial investments. I should attend short specialized intense courses, even online, to advance their specialized knowledge to be on top of the game; ahead of the pack; and poised to fly. ‘Acquire knowledge, it enables its professor to distinguish right from wrong; it lights the way to heaven. It is our friend in the desert, our company in solitude and companion when friendless. It guides I to happiness, it sustains I in misery, and it is an ornament amongst friends and armor against enemies.’ the Muslims believe.Aristotle wrote that ‘by nature, all men desire knowledge.’ More than 2,000 years later, Pope John Paul II claimed that, ‘whereas at one time the decisive factor of production was the land, and later capital, today the decisive factor is increasingly man himself, that is, his knowledge.’ It seems that two respected individuals from two different eras
  • 41. Ojijo’s Investment Clubs Manual! are trying to tell me something important about knowledge. I should never stop trying to learn more. 139The more extensive my knowledge of what has been done, the greater will be my Page power of knowing what to do. ‘As a general rule, the most successful man in life is the man who has the best information.’ said Benjamin Disraeli. All knowledge is built from previous knowledge. I should learn something new about the stock market every day, a new way of analyzing companies, a new way of calculating risks, a new way of portfolio allocation and mixing. I must read the technical journals which will keep members abreast of the field and career. I should build my knowledge base to help me in achieving financial independence. Whether it takes a week, a month or a year to become thoroughly knowledgeable, it does not matter. I should start learning immediately, today. I should make sure the members learn, by being informed and through experience. This is an area where the Universal Law of accumulation is important; that any body of knowledge is a result of hundreds, perhaps thousands, of small pieces of information. Investing is a big bet on an unknowable future. The mark of wisdom is accepting just how unknowable it is. Granted, that is not easy. Confucius said centuries past that, ‘When I do not know a thing, to allow that I do not know it-this is knowledge.’ I should accept I need to learn, and then learn.Reading makes me Invest in things I know. There is a great investing saying thus, ‘Invest in things I know.’ Peter Lynch said it best when he said, "Never invest in an idea I cannot illustrate with a crayon." Reading makes me Invest in things I know. Peter Lynch is the guy who took over the $18 million Magellan Fund in 1977 that grew to more than $14Billion in assets by the time he retired only thirteen years later in 1990. Peter advises beginners thus; "invest in what me know", and his message still resonates with working people who do not have the time to learn complicated technical analysis or read financial reports as thick as a phone book. Invest in what I know. Sounds simple but there is a lot of wisdom in this advice. In our everyday lives we tend to become experts in some field or another either because it relates to our career or because we use related products on a daily basis. This expertise is my foundation and gold mine as an investor. We should play to our strengths when we invest. Ignoring this rule can ruin even great strategies. For example, a value investor is always looking for great bargains, i.e. underpriced stocks. But if they buy companies that they know little about, more often than not theyll wind up with a stock that has done something to deserve a low share price and would have been best avoided. There is an enormous amount of information available for any stock wed like to buy. I should study the company, their competition, the industry, and anything else I can think of before I decide. This sounds like a lot of work but my portfolio will reward me generously in the form of profits if I do my homework.
  • 42. Ojijo’s Investment Clubs Manual! • Principle 9: Re-Investing & Compounding! 139Compounding is the most important principle in saving and investing. It has been called the eighth wonder of the world. It is the key concept of any saving and Page investing plan. Albert Einstein called compound interest "the greatest mathematical discovery of all time". This is true partly because, unlike the trigonometry or calculus I studied back in high school, compounding can be applied to everyday life, and in finance, it applies to amplify the growth of my working money. Whereas investing maximizes my earning potential, compounding maximizes the earning potential of my investments. Compounding depends on two things, time and reinvesting. The two make compounding work. I must keep hands off the principal and earned interest. Reinvesting earnings allows the members to take advantage of compounding.Compounding makes money make money: The wonder of compounding ("compound interest") transforms my working money into a state-of-the-art, highly powerful income-generating tool. Compounding is the process of generating earnings on an assets reinvested earnings. To work, it requires two things: re-investment of earnings and time. The more time I give my investments, the more I am able to accelerate the income potential of my original investment, which takes the pressure off of me.Compounding makes me safer and wealthier: I do not have to place a large amount of money into highly volatile stocks to make money. I can, but if anything; that is the surefire way to lose my hard earned money. My investments do not need to return 20% or more to make me wealthy. By investing small sums, and making average gains I can increase my wealth. Understanding compounding interest will make me a safer and wealthier investor.Compounding escalates interest: The return I receive on an investment is interest. If I invest $20,000 and it returns a modest 10% a year then I will have earned $2,000 in interest. Compounding interest is the escalating effect of interest. As an example, if my $20,000 investment was returning 10% per year after 10 years I would expect to receive $20,000 in interest. Actually it is much more than that. Compounding interest ensures the amount I earn is more. After Year 1 I receive $2,000 which makes my investment $22,000. For Year 2, 10% of $22,000 is $2,200. This is because I reinvested that $2,000; it works together with the original investment. This means the amount of interest I receive in year 2 is greater than year 1. This interest I am earning is compounding. Every year, my investment compounds more and more. After 5 years my investment of $20,000 has gone up to $32,210. That is interest of $12,210 not $10,000 as I first thought. This little bit extra may seem like peanuts, but I didnt have to lift a finger to earn that $2,210. More importantly, this $2,210 also starts to earn interest. At the end of 10 years my investment is worth $51,875. I have returned $31,875 and not $20,000.
  • 43. Ojijo’s Investment Clubs Manual!This shows the power of compounding interest. This is one sum of money invested over 10 years with no contributions and earning modest returns. This increase in 139 the amount made each year is compounding in action: compounding of interest (interest-on-interest) or interest earning interest on interest and so on. This Page will continue as long as I keep reinvesting and earning interest. The more I invest the more money I will get to re-invest. Robert Toru Kiyosaki says of the power of re-investing, ‘I have a problem with too much money. I cannot reinvest it fast enough, and because I reinvest it, more money comes in. Yes, the rich do get richer.’ Understanding and applying compounding interest is a long term investment strategy that will put me on the right road to retiring on a comfortable amount of money.Compounding is premised on the doctrine of the Time Value of Money. (TVM). Time Value of Money (TVM) is the idea that money available at the present time is worth more than the same amount in the future due to its potential earning capacity. This core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received. The time value of money demonstrates that, all things being equal, it is better to have money now rather than later. I need to start investment now, today. I need to start investing now, today.The time value of money, also referred to as "present discounted value", is the basis of compounding. Compounding is based on the Time Value of Money. By giving my investment more time to grow, I earn myself more money. Investments start to grow slowly and then accelerate. The invested money accumulates interest, and the accumulated interest is itself accruing more interest. Everyone knows that money deposited in a savings account will earn interest. Because of this universal fact, I would prefer to receive money today rather than the same amount in the future. The earlier I put money to work, the longer it works for the members, and the more wealth is generated. It makes a lot of sense. Wealth is generated via production. The longer my money works in good companies, the more time it has to produce further profit; profit which I also get to share.The right time to start investing is right now. People tend to be optimistic and happy to buy when the market is going up and pessimistic and likely to avoid investing when the market is going down. This is a mistake, when I have money to invest, I should put it to work; I should not try to wait for the perfect moment or the perfect stock because this may never come. I should remember that compound interest cannot work for me if my money is on the sidelines. Many beginners have a very low risk tolerance and want to avoid losing any money. Paradoxically, they also often expect superior returns. It does not work that way, there is no such thing as risk-free investing if I want the average market return of 10% or better. I should be reminded that as long as I select a good long term strategy and adhere to the basic principles of investing, history has NEVER failed, I WILL make money.
  • 44. Ojijo’s Investment Clubs Manual!I increase the future value of my money by investing and gaining interest over a period of time. Time literally is money - the value of the money I have now is not 139 the same as it will be in the future and vice versa. So, it is important to know how to calculate the time value of money so that I can distinguish between the worth Page of investments that offer I returns at different times. For example, a $100 bill has the same value as a $100 bill one year from now, does not it? Actually, although the bill is the same, I can do much more with the money if I have it now because over time I can earn more interest on my money. Assuming a 5% interest rate, $100 invested today will be worth $105 in one year ($100 multiplied by 1.05). Conversely, $100 received one year from now is only worth $95.24 today ($100 divided by 1.05), assuming a 5% interest rate.Compounding is realized by reinvesting the earned income or interest. Reinvesting is the investment of both principal and income from principal rather than distributing it as dividends or profits. Reinvestment of resources is a useful strategy that all entrepreneurs regularly employ. As long as I do not need the income (from dividend pamets), It is generally a good idea to reinvest. Reinvestment dovetails with the investing maxim of "dollar cost averaging," which holds that investors do well to consistently invest small amounts of money.Dividend Reinvestment: When I am paid a dividend, I typically can choose to receive it in cash or reinvest it and purchase additional stock. Dividend reinvestment is a systematic method of accumulating shares of a stock that pays a dividend. Many investors use dividend reinvestment as part of a long-term buy-and-hold investment program. After purchasing a stock, we should simply enroll in the companys Dividend Reinvestment Plan (DRiP) and my dividends will be automatically used to purchase additional shares. This will happen even as I send voluntary contributions to purchase additional shares. Further, putting dividend reinvestment stocks in a retirement account can shelter the dividends from current tax liability. If I choose to reinvest our dividends, in effect, were taking the dividend payment in stock instead of cash. Reinvesting dividend income is an important part of the overall return on our investment as a club. It is similar to compounding interest, with the principal of our investment constantly growing and theoretically paying higher dividends each quarter. The process takes time, but reinvesting our dividends can increase our total return in the long run. The cool thing is that I can put all of my profit back to work, and effectively have more money generating more profit. This process can keep iterating so long as I do not withdraw my money.How to Reinvest Dividends: A company typically pays dividends to its shareholders four times per year, while investment trusts often pay dividends monthly. Many kinds of mutual funds, and even some ETFs (exchange-traded funds), are designed to pay regular dividends based on their holdings. Ownership of any of these kinds of equities will result in dividend income. Some large companies
  • 45. Ojijo’s Investment Clubs Manual! allow the purchase of stock directly from the company, encouraging enrollment in a Dividend Investment Plan (DRiP) in which the dividends are paid in additional 139 shares. This benefits the company by minimizing its capital outlay for dividends while increasing the position size (and principal for future dividend payments) of Page the shareholder. Many brokers will ask at the time of purchase whether I want to elect to reinvest dividends or accept cash; I can change our selection at any time.Participation in a DRiP often affords additional benefits, such as low- or no-fee reinvestment purchases or purchases below market price. While it is possible to use cash dividends for reinvestment in other areas, dividend reinvestment makes it easy to maintain the discipline necessary for a long-term investment strategy. € CASH DIVIDEND: A cash payment to a companys stockholders out of the companys current earnings or accumulated profits. The dividend must be declared by the board of directors.
  • 46. Ojijo’s Investment Clubs Manual!TYPES OF INVESTMENT CLUBS 139Investment clubs can be classified using various criteria. However, the most basic Page criteria is to classify according to assets invested in, meeting regularity, or value of investments contributed by individuals. ¥ Asset Based Investment ClubsThese are classified according to assets or investment vehicles. There are seven general categories of such investment clubs by asset class, and they include: € Fixed Assets Investment Clubs, also called Real Estate Investment Clubs, which invests in fixed assets, which includes long-term tangible/physical assets (such as machinery, land, buildings, equipments, vehicles), or intangible/technological asset, which is a tool, technique, craft, system or method of organization in order to solve a problem or serve some purpose. Technology Assets can also be in software or computer application form, in which case they are called Information Technology/IT Assets (commonly referred to as software). € Financial Instruments Investment Clubs, also called Stock Investment Clubs, invest in financial instruments, also called securities, which are real (hard copy) or virtual (electronic) documents representing a legal agreement/contract involving a monetary value. They include those which indicate that someone owes me money (Debt Instruments/Bonds), or that I own part of some business process (Equity Instruments/Shares), or cash investment, whose values are determined directly by the market (Bank Deposits/Bank Accounts) or those that which are linked to a specific asset or indicator/variable and are used to trade financial risks (Financial Derivatives- options, futures, forwards and swaps). A practical book to read for further knowledge in investing in financial assets is Ojijo’s Guide to Financial Instruments & Financial Investments. € Collective Investment Schemes (CIS) Investment Clubs, which invest in professional schemes, called investment companies, including closed-end funds, mutual funds and unit trusts. Such schemes pool resources from many investors and place under professional management. € Insurance Investments Clubs, invest in insurance products which have both a protection function as well as an investment, function. € Alternative Investments Clubs, invest in investment product other than traditional investments such as stocks, bonds or cash. They are mostly held by institutional investors or accredited, high-net-worth individuals because of their complex nature, limited regulations, need for expertise knowledge and relative lack of liquidity. They include Private Equity and Collectibles. € Forex/Currency Investments Clubs, invest in the currency market, involves purchasing, holding and selling foreign currencies.
  • 47. Ojijo’s Investment Clubs Manual!However, of the seven, the most notable are Real Estate Investment Clubs; and Stock Investment Clubs. It does not matter which method I choose for investing my 139 money, the goal is always to put my money to work so it earns me an additional profit. Even though this is a simple idea; it is the most important concept for me Page to understand. • Property Investment ClubProperty Investment Clubs represent the newest incarnation of the traditional investment club mindset. There are lumps and lumps of money in real estate and property investments. In typical situations, the value of a particular property steadily increases with the passage of time except for the most irregular of reasons. Due to this fact, a lot of people usually try to invest on a property or two with the hopes of selling or renting it in the future for significant amounts of money. Though the idea might sound easy, investing in property entails serious money and making a mistake or decision can be very costly and can cause major damage. To minimize risks, it is often a good idea to join a property investment club. Property investment club is an association of property investors.A common function of a property investment club is to help its members fully understand the basic idea and process of how to successfully invest on a property and how to discern good property investments from those that will only waste time and more importantly, money. The members get to pool a larger sum of money so they can target potential investments which would otherwise be too costly if they were to invest by themselves. Members of such clubs are usually not clustered in one region and are scattered all throughout, which is good since it allows them to cover more area, extend their reach, and discover potentially high value investments. Further, members can usually get discounts on investments since they deal with bulk property investments and not just single investments. However, the majority of investment clubs stick to the stock market and Property Investment Clubs are still a bit of a precarious angle to negotiate. • Stock Investment ClubsInvesting in the stock market can be intimidating, given the technical knowledge on how to differentiate between the different types of securities, investing styles and trading strategies, analyzing market data, financials, and knowing when to act? And for beginners, this can be especially off-putting. Financial planners, advisors and brokers are good sources of advice, but if I am interested in learning about the stock market and how to take control of my money, a Stock Investment Club may be worth considering. Investing in the stock market can be exciting, even riveting.
  • 48. Ojijo’s Investment Clubs Manual!Many people who have an urge to buy and sell stocks simply give up on their dreams because they assume they can never have the clout of a professional 139 investments adviser. These people have obviously never heard of Stock Investment Clubs, where even the most modest of housewives or businessmen can feel the Page thrill of the market with a minimal investment. Prices jump wildly and can double or halve over night. Investors in stock market are however cautious, sensible moneymakers who want to retire with a comfortable nest egg and have figured out that investing in the stock market is one of the best ways to do that. If I am interested in investing in the stock market, but have no idea where to start, I am not alone; hundreds, thousands, and even millions of people around the world share this dilemma. Such a large number of people cannot go on with their pleas for help unanswered, hence the formation of clubs that help people with such matters. A Stock Investment Club essentially is a gathering of people just like me who pool their money together and then decide on which stocks to buy in an attempt to win big.Further, being a group, a stock investment club offers all the social advantages of any sort of social gathering: bringing people with similar minds and/or interests together to talk about and do together what they want to do or like doing. ¥ Online vis-à-vis Physical Investment ClubsWith the popularity of the usage of internet-based services, investment clubs have also ridden the wave of the new times. Today, investment clubs do not have to meet personally to decide on their financial strategies, but they can now do so online as an Online Investment Club.Online investment clubs, despite having the human factor somewhat mitigated by communication over the internet, are no less noble in intention; members will still be interacting, and ultimately learning from each other, regardless of communication medium. Online clubs for investing bear the characteristics of traditional investment clubs, only that the members need not personally meet in a meeting room, but they talk online, even in the comfort of their own homes or offices. If one needs to make a suggestion or a comment regarding a financial decision or activity, he need not wait till the next meeting. Members can make themselves heard through short comments, posts or e-mails. In the world of investments and finance, timing and quick action is crucial. An online investment club can give the advantage of getting fast results and efficient information dissemination among members. Members can make comments and ratify decisions anytime. Other documents and files concerning the investments can be rapidly exchanged between members without delay. I do not have to meet my club at some out of the way joint that is in between everybodys locations. Furthermore, there are low chances of meetings getting cancelled because of bad weather and other reasons because online meetings do not require the members to leave their own homes! Furthermore, information regarding the market and
  • 49. Ojijo’s Investment Clubs Manual! investment are readily available on the Internet thus lessening the hassle of getting information from some other source. With the advantages presented by 139 online investment clubs, it is certain that they will be around for a while. PageHowever, I do not get to know my fellow members. Online investment clubs take all the fun and personality out of the venture and simply makes me chat and text fellow investors whom I know little to nothing about. It is this last fact that makes many despise the idea of online investment clubs. For the more social amongst us, though, it is wise to consider a regular investment club before I get roped up into an online one. ¥ Contributing Vis-À-Vis Self-directedThough most investment clubs pool resources to invest as a unit, some investment clubs meet strictly on a discussion basis - meaning, its members gather to share ideas but do the actual investing on their own.Such Self-Directed Investment Clubs simply meet and learn about investing but invest on their own. Contributing Investment Clubs on the other hand require members to contribute monies to a collective pool on a periodic basis. The periodic basis is typically monthly. ¥ Middle Class Vis-À-Vis High Net worth ClubsWhereas most clubs have the members contribute an average of US$ 50 per month, there are also investment clubs that cater for high-net-worth individuals where entry levels are very steep, even up to amounts of over US$ 1,000 per month.
  • 50. Ojijo’s Investment Clubs Manual!WHY AN INVESTMENT CLUB? 139There are many reasons why it is personally beneficial for me (and mutually Page beneficial for us as prospective members of a club) to join together in starting an investment club. An investment club has three main advantages, namely being a system for members to network, learn and earn.NETWORKING • Community, Togetherness!The best thing about joining an investment club is typically the camaraderie of members. Investments Club provides a great way to meet, network and make valuable contacts, and share with investment professionals and people with similar interests. The prestigious opportunity to network and an excellent social calendar makes the club most exciting for people of all disciplines to join. An Investments Club provides a great way to meet and network with many members and investment professionals. Through membership, individual investors connect in unique and powerful ways. • Two Is Greater Than One/The Law of AveragesThe large number of individuals allows many different viewpoints, opinions, and mindsets to work together to ensure that the best possible stocks are bought. The strength of an investment club is based on the fact that more members mean more money being invested and thus more profit being earned. • Similar InterestsMembers of an investment club enjoy getting together on a regular basis to discuss the investment market and to learn more about a subject that greatly interests them. For the added excitement of making an informed judgment to invest in, and share in someone elses dream and see it unfold. Enjoying a commonality of interest with other investors can be a lot of fun. These clubs are open places for us to meet, socialize and talk with other like-minded investors. Surrounding myself with like minds and like interests is probably the most effective way to learn, especially concerning a topic as risky and complicated as investing in stocks. Likewise, those around me may also learn a thing or two from me and my experiences, whether in the stock market or not. • Regular MeetingsAs a member of an investment club, I meet regularly with friends and colleagues, research, share, laugh, socialize, and make money. What could be more fun? “What could be better than making money while I am having a good time?” Investment
  • 51. Ojijo’s Investment Clubs Manual! clubs are a great way to learn and apply investing skills in a friendly, pressure- free atmosphere. Investment clubs enable individual investors to come together in 139 small groups to learn, develop investing skills, and help each other become more successful investors. Regular meetings helps the members to ensure that sufficient Page progress is being made towards achieving the clubs investment goals and objectives, share their views and enjoy social interaction between like-minded individuals. • Events ParticipationInvestment clubs also participate in events such as Stock Market Challenge and Traders Expo. The investment clubs further can host numerous exclusive events and presentations. These events are often run together with sponsors and partners, and provide fantastic social and networking opportunities for all members. Events are normally held in some of the best hotels, bars and restaurants. As participants in local and regional events sponsored by investing chapters, members enjoy valuable opportunities to share ideas and information with investors and fellow members. Joining an investment club is certainly a fun and educational experience! The most important thing to remember when starting a club is to have fun. Investment clubs organize social events for members to take part in. The events may include voluntary travel to impact other’s lives. The events can also be organized in partnership with other societies, or associations. Clubs are about socializing and sharing an interest with friends and associates. Investment club members should aim to offer hundreds of hours of volunteerism and community involvement. It is great to give. • Online CommunityAs part of an online community, members can learn and share through a variety of discussion forums, blogs and live online events. In addition to holding (in)formal get together, it is also practical to incorporate an online presence into an investment club. Often busy schedules and the inconvenience of meeting in a physical location can make connecting and conducting meetings in cyberspace more practical. Thus, given the hyper-speed pace of the marketplace, and the impact that rapid decision-making can have on portfolio performance, adding online club capability to any investment club is an important requirement for efficiently managing an investment portfolio in today’s digital economy. • Investment PartnersInvestment partners are usually committed to actively supporting the club’s mission of investor education and empowerment. These partners include listed companies, stock brokers, capital markets authority, stock exchange and investment banks, to name but a few.
  • 52. Ojijo’s Investment Clubs Manual! • Internships and Access to Career 139Investments Clubs that are aggressive and ambitious in seeking partnerships can offer internships and provide members with access to career opportunities in the Page (financial) investment industry and the opportunity to attend events.LEARNING • Combined Investment KnowledgeMore members mean more ideas! This is the most powerful statement of all, and cannot be undervalued. If I want to learn more about investing, then an investment club is for me, definitely. One of the goals and benefits of investment clubs is the opportunity to learn. While the primary motivation is to make the most money possible, investment clubs are also a great way for investors to share ideas and learn about the market. When I work with a group of people who have a similar interest in making money and becoming rich, I will be able to have a huge amount of combined knowledge working in my favor. Even those complete newcomers to the stock market will have a valued opinion and pieces of information that when added all together equals a lot of thinking power.I will be able to make decisions about where I am going to invest my money rationally and intelligently since the choice is of the majority and is based on a great deal of thought and information; an informed choice. Whether or not I know or possess any knowledge on the stock market and the way financial institutions and businesses work or how to invest on an individual basis or have a personal portfolio of my very own; I need to keep an open mind and be willing to learn and to adapt to investing on the basis of a partnership. Larger amounts of money, a democratic vote on individual stocks, meticulous club record-keeping, and a host of other elements are included in the process. A willingness to adapt and to actually deal professionally with the club as a whole will definitely work in my favor. • Application of KnowledgeInvestment clubs are a terrific way to learn because the focus is on both learning and implementing. The Club facilitates an environment where members can develop a better understanding of investment strategies while interacting with professionals in the investment community. Ideally, an investment club has an education officer who invites guest speakers, maintains the library and organizes field trips. An education program offers proven strategies to help investors achieve their long-term financial goals and secure a better financial future for themselves and their families. Speakers at each club meetings discuss various topics that include Current Market Conditions, Market Forecasts, Investing Strategies, Investment Analysis, Career Advice, detailed study of the mechanisms associated with the many
  • 53. Ojijo’s Investment Clubs Manual! types of investment, portfolio theory and management, knowledge of the global economy and Guidance. 139"The best investors are the best informed," says Kenneth Janke, chairman of Better Page Investing (formerly the National Association of Investors Corp.). Investment clubs will seek the advice from financial advisers, but as the clubs gain more knowledge, the need for advisers lessens. The best clubs use technology to acquire more information about the market. Investment clubs also leverage the group knowledge. All members may not be financially able or be business savvy to complete a deal, but leveraging the best everyone can offer in experience, passion and commitment will propel the group to new heights. Knowledge is the great equalizer. Being a member of a club is enlightening and an excellent learning experience.Successful clubs generally put as much effort into researching and learning rather than just simply buying. Experts in the field can serve as guest speakers for the group, and there may be required reading of books and other publications before each meeting. Purchasing this knowledge is more cost-effective than if an individual were to just do it alone. With it, the members are empowered to make winning investment decisions. Education is done through: € Local, chapter-sponsored seminars, workshops and investor fairs that teach the investing system, using a hands-on, collaborative approach. € National and regional events that give the members access to market intelligence, financial insights and actionable ideas direct from leading investing experts. € Online investing courses, webinars and stock studies that allow members to learn at their own pace, when and where they wish. € Books and newsletters that help members apply investing principles and investing best-practices. • Learning to SaveInvestments Club members learn how to save for investment purposes. Investment clubs offer the structure and support that many people need to get started saving and investing, and clubs make it possible to get into the market without a big initial investment, which is yet another incentive for new investors. The key to investing is savings.An investments club encourages the members to invest, through the monthly contribution to the investments club account, hence acting as automatic savings. Such an effective savings strategy coupled with a smart investing strategy will help members to meet their financial goals. Every dollar saved helps members to control their current consumption and build on their wealth.
  • 54. Ojijo’s Investment Clubs Manual!Further, through the power of annual compounding, it increases the size of the nest egg I will have for retirement. Saving money is one of the necessary requirements 139 of building wealth. No matter how much I make, my income must exceed my expenses if I am ever to build wealth. In his masterpiece, The Richest Man in Page Babylon, George Clason, the soldier, businessman and writer, advises income earners thus; ‘pay yourself first.’ To save is to pay myself. Benjamin Franklin, one of the Founding Fathers of the United States and a noted polymath, a leading author and printer, satirist, political theorist, politician, scientist, inventor, civic activist, statesman, soldier, and diplomat was right, ‘A penny saved is a penny earned.’This is one area where the Universal Law of Accumulation works. Every large fortune is an accumulation of hundreds and thousands of small amounts of money. When I begin to save money, it sets up a force field of energy and it triggers the Universal Law of attraction. Money always works hard to make more money. Each dollar is a great employee, willing to make even more dollars and more employees. As a result I begin to attract to me even more bits of money to add to my savings. After saving, I will invest my savings. Paul Clitheroe, the Australian television presenter, financial analyst and financial advisor, was quoted saying that, ‘There are plenty of ways to get ahead. The first is so basic Im almost embarrassed to say it: spend less than you earn.’ A good investment club will help me well into my retirement and a bad one will have me still working through it.EARNING • Income GenerationWhen a group of people make investment decisions after a series of discussions and debates, the potential for profit is greater than when individuals make their own decisions about where and how to invest their money. Thanks to the pooling of savings, I can access investment opportunities which I cannot take advantage of as an individual. To have the opportunity for better returns than bank on annuity savings with similar liquidity of my investment. Further, when my club makes a profit, no matter how small, the amount must be distributed throughout the investment club membership. Further, an investment club helps the members to maximize returns as it creates a tool which can help my money work hard for me and show better returns than if it were simply left on deposit. It hence leads to personal development through increasing net worth, creating a long-term savings plan for me, the kick of feeling the pure excitement when things go well. • Low Overhead CostsGroup investments lower the overhead cost. For example if a team contains 100 members, and each trade costs 5 dollars to execute, then an equity trade of $5000 would
  • 55. Ojijo’s Investment Clubs Manual! have an overhead of 0.1% or 1/10 of a percent. Whereas if you were trying to invest $50 dollars per month on our own, that same transaction would have a 10% overhead. 139All operating costs in an investment club are transparent and open. We do not have Page to worry about expenses. The management cost will be almost as low as possible because there will be no paid stock analysts or some Mutual Fund Manager getting rich on our dime. The only costs incurred will be the legal fees to set up the club, the accounting fees, the transaction fees, and any applicable service fees, including minimal fees for snacks during meetings. The only other expense is the broker charges/commissions for selling. This should keep the entire overhead below 1%. Members decide on a monthly subscription to raise cash to buy shares. With some clubs it is as low as USD10 per member, but more typically the subscription is around £30-£50. • Low Personal Risk / Two Are Stronger than OneEven though the money that my club has to invest can be quite large, my own personal contribution can be very minimal. This way I am not risking a lot of my money while I learn how the stock market works. I can still make some great investments but my loss factor will be manageable.One of the most valuable ongoing benefits of an investment club, especially for beginner investors, is the ability to have investment decisions analyzed by different points of view. A group can be capable of more output than any individual within the group; than me. The way the club works is that each month, 10 members or so will do research and present their proposals to the other members. Then the entire collective club will vote on the proposals. The winning proposal will be followed. This is strength through numbers: the more members we have with spare cash, the more our buying power increases or the more diverse our portfolio grows. The administrative work associated with running the club can also be shared. Lyndon Baines Johnson, the 36th President of the United States, often referred to as LBJ, was quoted as saying, ‘There is no problem that we cannot solve together, and very few that we can solve alone by ourselves’. Team support is very important in achieving our dreams. When two people walk together, they can go a long while. When two people sleep together, they give each other warmth,’ the Bible says. The Swedes believe that ‘Shared joy is a double joy; shared sorrow is half a sorrow.’An investment club is like a dream, with every member a part of the dream. From time immemorial, the Turks have believed that, ‘no road is long with good company’. The dream team will fight for me when I am down and low. The team will make sure I do not remain down when I fall. The dream team is premised on the ‘mastermind principle’; which is soundly described in the classic Think and Grow Rich by Napoleon Hill that ‘two minds are better than one’. A Luo proverb says, ‘Alone a youth runs fast, with an elder slow, but together they go far.’ It is possible for a
  • 56. Ojijo’s Investment Clubs Manual! group of two or more people to cooperate in such a way that the productivity of each enhances the productivity of the other. The Bible is right, ‘A rope of two cords 139 is stronger than that of one cord. In the team I will find security of thought and action. The Quran teaches that ‘there is safety in the multitude of advisors.’ The Page strength of an investment club is based on the fact that more members mean more money being invested and thus more profit being earned.Also, the large number of individuals allows many different viewpoints, opinions, and mindsets to work together to ensure that the best possible stocks are bought. Many people are terrified of taking their first investing steps. But investment clubs make this a relatively painless experience. Members cough up modest sums and invest carefully together after deliberating over the pros and cons of any action.Further, when we come together to form a club, the worst case scenario of solvency is helped by the fact that I am not the only one suffering in such a situation. The more people involved in an investment equates to more people who are harmed if such an investment fails. This almost automatically ensures that more people are concerned about the failure of my venture. Another added benefit is the fact that I will be drawing from a larger and arguably more informed group of people each time I consider choosing one stock or another. This is the reason that many investment clubs will cherry-pick their members; having a diverse, unique, and eclectic group of individuals will help to ensure that more viewpoints are presented and thus covered when making financial agreements. It must be stated, however, that an investment club partnership agreement also may potentially put me at risk of the varying ideas and attitudes of the people that I am going into business with. If I have wildly differing opinions on, say, mortgages or mutual funds I can be sure that such disagreements will arise fully when I try to navigate the tricky waters of the stock market. The benefits of joining an investment club partnership agreement will make me a party to the whims of others so it is necessary to be aware of this before I sign my future away for the short term. On the other hand, I gain practical wisdom about the stock market from whomever I am joining up with so I may in fact be benefiting from splitting my losses and even the most frugal of financial advisers will inform me that such an idea is nothing but a good one. • Tax Deductions for ExpensesBecause each club will be set up as a corporate entity, that is a corporation or limited liability company, or registered partnership, we will be entitled to use the overhead expenses as tax deductions on our personal income tax (where applicable), and hence pay less tax, an take home more returns legally.
  • 57. Ojijo’s Investment Clubs Manual! • Invest Regularly/Dollar Cost Averaging 139Investment clubs have the ability to invest in the stock market even when the market is dropping or is slow. Because the money is spread out among a group of Page members the room for huge personal loss does not exist. They take advantage of dollar cost averaging. • ReinvestSince most members are part of an investment club for fun, and to learn more about the stock market, there will be more room for re-investing the gains and dividends that are earned from successful investments rather than spend the capital gains as income. When I invest on my own I will not be as willing to part with earned investment money and reinvest everything that I gain. DIVIDEND: A distribution of the earnings of a corporation Dividends may be in the form of cash, stock or property (other securities owned by the corporation). A dividend can only be paid by declaration of the board of directors of the corporation. • Portfolio DiversificationWhen I am investing with a group of people I can spread out my investments and diversify my investments and not limit myself to just one or two market choices. The golden rule of successful investment is to diversify my portfolio. Diversification is a fundamental aspect of financial planning. In a nutshell, it is the old adage to not put all my eggs in one basket. If I have all my eggs in one basket and something happens to the basket then I am in big trouble. But instead, let us say I keep some of my eggs in the refrigerator. If I spread my investments across various types of assets and markets, I will reduce the risk of catastrophic financial losses. Then if something happens to the eggs in the basket I still have the ones in the refrigerator. Different securities perform differently at any point in time, so with a mix of asset types, my entire portfolio does not suffer the impact of a decline of any one security. When my stocks go down, I may still have the stability of the bonds in my portfolio. Diversifying investments in a portfolio helps to manage risk. € DIVERSIFICATION: The strategy of investing in different asset classes and among the securities of many issuers in an attempt to lower overall investment risk. € ASSET: Any item of value that an individual or a corporation owns.
  • 58. Ojijo’s Investment Clubs Manual!HOW AN INVESTMENT CLUB WORKS/CLUB ADMINISTRATION 139The goals of an investment club are threesome, that is; Education; Networking; and Page Investments. For an investment club to meet there goals, these are some guidelines which need to be in place. These are the conditions that are met and basic rules that are followed. Each member of the investment club needs to be certain of these, and if the members are not disciplined, and do not follow them, then the likelihood of having a successful investment club will be slim.NETWORKING/MEETINGAn Investments Club is a member organization that facilitates an environment where members can develop a better understanding of investment strategies while interacting with professionals in the investment community. The interaction, or networking, is achieved through various structures as below: ¥ Membership o Recruitment StrategyAn investment club is only as strong as its membership. The members should be responsible, reliable people who are eager to learn. After knowing what it is I want my club to do and what type of legal structure I want for it, then I will embark on recruiting members. This is the first step towards officially starting my investment club. Prior to my first meeting with those people interested in joining my investment club I should provide them with information about the club. This includes letting them know what the club is going to be about and how it should be run. As founder, or founders, we do have a choice as to who we invite in to the club. Discrimination laws notwithstanding, founders can set out specific parameters which potential members have to meet in order to ensure the right mix.I should not be too concerned if the majority of the people who have expressed an interest in joining my club are all new to the stock market. In fact, this can be a good thing that my club is composed of people who have no real expertise in the market. People who have prior experience with the stock market may quickly become frustrated dealing with amateurs. I should not be worried about being part of a group of people that have no experience since there are many resources that are available to help us learn about investing and the process that I need to follow. The ideal membership would comprise a few analytical minds, a good accountant, an experienced captain at the helm, and IT whiz and a good administrator. An enthusiastic core membership with the ability and desire to achieve a common goal will take our club a long way.
  • 59. Ojijo’s Investment Clubs Manual!Further, while recruiting, I need to appreciate the need for a particular size of the investment club. Studies show that a good size for an investment club is 139 approximately 12 to 18 members. When I limit the size of the club to this many members I am still small enough to hold meetings in member’s homes. PageI will need to find members to join my investment club and I can achieve this in a number of ways. o FriendsI should start talking with friends and see whos interested. If I have one or two friends who have shown a mutual interest in the stock market or bond market I can approach them to join my investing club. It is best to gather a variety of people who will bring to the club a variety of interests, experiences, and perspectives. Once I find a few interested friends, I will let them invite a few of their own friends. I will aim to form a club with roughly 12 to 18 members, give or take a few. Too few and I may have trouble accumulating funds to invest. Too many and I will have trouble having quality discussions and finding a place to meet. Further, a number below 20 allows the possibility to register as a limited partnership, which by law, cannot be over 20 members. o Word-of-mouthWord-of-mouth, regarded as one of the best forms of marketing, should soon see potential members eagerly offering their resources, particularly after the word is out that we have managed to complete a profitable trade, or even based on the idea. o AdvertisementsI can find other people who are interested in joining in my investment club by advertising in the newspaper or by posting notices on community bulletin boards. The important thing to remember is that I want to attract people who have an interest in learning more about the stock market while they invest small amounts of money. o RegistrationAfter recruitment, the nest stage is the registration of the members who are interested. This allows the club secretary to take email address and contact details for communication purposes. Every prospective individual also get a membership card.
  • 60. Ojijo’s Investment Clubs Manual!  Application Form 139Further, there should be an application form that all members must fill out in order to gain some information on the background and experience of members. Page  Member Interests ListOn registration, there should be made by the secretary a list of member interests and expertise. This is important so that as we begin hunting for companies in which to invest, everyone gets to choose an industry of interest to him. As both Peter Lynch likes to point out, it is a great strategy to "buy what you know." It is probably best restated as "research what you know." If a member is in the chemical business, she might volunteer to look into companies in that industry, choosing a few for a close look. If a member is an avid golfer, she might look into golf-related companies. It is a good idea to make a list of the industries with which my club members are familiar.  Additional Recruitment of New MembersThe recruitment or selection of a new member is conditional upon there being no objection from a member at the meeting at which the application is considered. The club reserves the right to refuse admission to any person without giving a reason. On admission to the club, a new member will sign an agreement accepting all responsibilities associated with membership. The new member should pay the initial lump-sum subscription and the first months subscription. These sums will purchase for the new member a number of units calculated according to club rules and the unit value prevailing at the time of joining.  Withdrawal of MembershipA member should cease to be a member of the club as per the constitution or club agreement and bye laws. If a member should die or cease to be a member for any reason, the club should pay to the member or to persons entitled by law an amount equal to the former members share in the assets of the club as defined in club rules. Resignation of membership must be submitted in writing to the Chairperson, Finance Officer or Secretary before the monthly meeting at which the resignation is to take effect. Members leaving the club, whether by resignation or as the result of termination of membership, should sell back to the club their entire holding of units. The amount to be paid to a member leaving the club should be calculated by multiplying the total number of units held by the member by the unit value declared by the Finance Officer at the club meeting at which the resignation became effective, subject to deduction of club brokerage if such should be in force at that time and any legal fees incurred by the club in connection with the withdrawal of the member. Any surplus cash held to the members credit will be added. Payment to the member who has left the club should be made as soon as possible.
  • 61. Ojijo’s Investment Clubs Manual!  Subscriptions 139Investments Club membership should have a cost, depending on the club membership agreement. The costs may be different depending on the types of Page members. For instance, an investment club operating within the university may have different costs for students to join and non university students. • Joining Fees/SubscriptionAn investment club should have joining fees which act as commitment fees. It also helps in the opening of brokerage accounts, bank account, registration of the investment club and obtaining trading licenses. The joining fee also buys a number of Units of shares. Receipts are issued for all the monies received. • Monthly SubscriptionClub members should be committed through subscriptions and be emphatic on a long-term view of investments. Members should come to a mutual agreement upon how much money they are each going to contribute each month. Every club member should pay, per calendar month, into the clubs bank account, the requisite amount of the agreed monthly minimum contribution. This should not be as high as possible. After all, this is a learning activity, and members can always increase the amount at a later date. The club should allow members to contribute more than the monthly minimum level if they so desire.Each members subscription will purchase for that member an appropriate number of units according to the unit value declared at the monthly meeting preceding the date when the subscription was paid, subject to club brokerage if such should be in force at the time. The Finance Officer should notify members at their monthly meeting if any member is in arrears. Many clubs start out with small contributions of anywhere from $25 to $50 dollars. It is important to note that no member should have over 25% of clubs ownership. If any members’ assets become greater than 25% of the total assets of the club, the member should cease contributions until the value of those assets are below 25% of the total assets of the club. • Monthly Dues The club should also have monthly dues to help to pay for events that we attend, gifts for guest speakers, social meetings, registration fees of the club, and minor overhead expenses. Changes can be made at a later date. ¥ Meetings o The Four Types of Meetings
  • 62. Ojijo’s Investment Clubs Manual!An investment club has several types of meetings, depending on the structure of the club. These meetings serve as networking fora, learning/education classes, and also an 139 occasion and venue for members to contribute for purchasing stocks, mutual funds or other types of investments. As a requirement, investment clubs are filled Page with active participation. From researching stocks and companies to seeking out asset management software and recruiting new members to the group, they are not only a sink of money but also of time. It is important that members of the group are able to attend all meetings, and they are part of the decision making process. If the group decision is held up because some members do not attend regularly, the endeavors of the investment group are jeopardized.At a minimum, a club should have the following meetings: o Weekly MeetingsThe club should meet for an average of two hours every week. These are social networking and education meetings. Every meeting discusses matters of business and finance, and other important human development skills of leadership and effective communication. Such weekly meetings should cover two major topical areas of personal development and financial literacy, as below: Personal Development/Self-Help Training: Personal development is the greatest form of investment, involves engaging in activities which enable me to identify & develop my talents and skills; realize my potential; and achieve my dreams & aspirations so as to enhance the quality of my life and contribute to the community. Two guides to personal development are Ojijo’s The Gift of E11even Moves to Make Me Wealthy, which teaches me the eleven areas that I need to develop to enjoy the complete and wealthy lifestyle, which are health, relationships, riches/money, career, adventure, happiness, dreams & goals, positive attitude, controlling the day, helping people and being peaceful); and Ojijo’s Guide to Identify & Develop My Talent, My Profession & My Career. The life skills imbibed are an essential ingredient for professional and personal success. Financial Literacy Training: Financial literacy is the financial knowledge that enables my child to confidently make informed and effective decisions on how to acquire, manage and use his money. The knowledge includes both information and experience. My child has to get as much financial information, which can be in any of the three ways of getting education, that is, through formal education, apprenticeship or personal reading and self-coaching; and he has to amass experience and horn his skills by applying the information he so learns in daily experiences. This mix of information and experience is what creates true knowledge. Other topics that speakers should discuss include Current Market Conditions, Market Forecasts, Investing Strategies and Investment Analysis and Entrepreneurship.
  • 63. Ojijo’s Investment Clubs Manual! o Monthly Meetings 139These meetings serve as an occasion for members to contribute to their monetary fund, which is intended for paying for stocks and shares, mutual money as well Page as other kinds of feasible investments. These meetings also serve to review club’s investment portfolio and discuss further purchases/sales, the stock market in general as well as debate new companies. • Special Events MeetingsThese are special events meetings called upon to discuss urgent issues, or when there is an important guest in town that the club invites to talk to them. The special events meetings may also be held to welcome new members. • Annual Club MeetingsAt each annual general meeting, a statement of account should be given by the Finance Officer, together with the report of the auditors. The Finance Officers report should include a full record of the clubs income and expenditure; a list of the clubs assets together with it is end -of -year valuation; also a capital account for each member showing his/her total contributions and drawings together with the current value of his/her holding. At these meetings, a report is given of investment club activities, investment transactions, performance analysis, portfolio management and lessons learnt and threats faced, opportunities for growth and weaknesses. o Meeting Times & PlaceAn investment club needs to agree on a regular meeting time, place, length, and format of the meeting. One reason to try and keep a club size to limited members is that it permits meetings to be held in living rooms. Another possibility is to seek out some other space, like a local library or church. A coffeehouse might also work. Further, perhaps a member has an available meeting room at his workplace. The club members then will decide when to meet, and how often. Most clubs meet once a month. This will help members keep meetings running efficiently and prevent someones report from going on for an hour and dragging things out too long. Most meetings will probably last between one and two hours. All members should agree on; ¥ The days and time that we will meet (most investment clubs meet once each month), ¥ The place for meetings, ¥ The length of the meetings (most meetings last about two to three hours),
  • 64. Ojijo’s Investment Clubs Manual! ¥ The organizational format that each meeting is going to take/conduct of business at meetings. 139 Page o Conduct of Business at MeetingsThe affairs of the club should be conducted in accordance with the letter and spirit of the constitution/agreement laid down by members. In order to operate an investment club, business must be conducted in an orderly fashion. The level of formality will vary based on the club type (see club types).Club members should communicate on a regular basis. Part of the experience of starting an investment club is getting together to enjoy similar interests and goals. The importance of good communication between members of the group cannot be stressed enough. A typical club will have informal channels of communication via mailing lists, twitter accounts or message boards. In additional to the informal channels of communication, an investment club must set up formal channels of communication to conduct business. Typically, this is done with monthly meetings. Typical meeting agendas include all the normal activities that the members would expect in an organization with elected officials.A typical meeting agenda is as below. 1. Welcome Remarks: Welcoming of all members and visitors attending by the chairman of the meeting; this may include prayer 2. Preliminaries/Old Business: Secretary reporting on apologies; reading last meetings minutes and asking for ratification of the same; reporting on any unfinished business from the previous meeting; reporting on assignments; and reporting on all voted decisions from the previous meeting. 3. Investment Agenda: Net Asset Value (NAV) presentation by the finance secretary, indicating what each club member is worth on paper; presentation of Available Funds to invest; Voting to hold cash, sell current assets or invest in the chosen investment options, specifying an exact amount to invest and strategy to execute that investment. 4. Learning Agenda: Presentation of Current Research, by the members on their pre- assigned reading; presentation of research by invited guest speakers; presentation of lessons learnt on a previous site visit; or watching an educational audio-visual presentation. 5. Networking: Presentation on networking events engaged in during the previous week; discussion of possible networking events; or engagement in a networking event. 6. Any Other Business: Discussion of matters not indicated in the agenda, or matters for tabling in the next meeting as agenda; or other issues not directly related to education, learning or networking. This could also include options to change a brokerage house, or discussions of counter party risk.
  • 65. Ojijo’s Investment Clubs Manual! 7. Formal Close of Meeting. 139 ¥ Club Management Committee Page o Club OfficersAn investment club should agree on what responsibilities there should be, and what kinds of officers will be needed to take on these responsibilities. There should be a clear clarification of the responsibilities of the officers, as well as club members. After all, even regular, non-officer members have responsibilities. The club should elect/appoint officers in one of the first meetings. It is important that all members of the club have the opportunity to serve in one post or another within a period of five years (usually most clubs have started achieving their financial goals after five years). This therefore means that the club leadership should rotate annually. These officers should resign at the following Annual General Meeting, but should be eligible for re-election. If an officer should leave the club, die or otherwise be unable to continue to carry out his/her duties, a replacement may be elected at a subsequent Ordinary Meeting of Members.The investments club should have the following club officers, who form the Club Management Committee:  Club PresidentThe president is also known as the presiding partner. S/he has the following roles and responsibilities: ¥ Presides over the meetings, ¥ Finalizes meeting agendas, helped by input from the members and secretary. ¥ Directs operations to ensure that all members stick to the clubs’ rules and constitution to keep the club on track and acting within the law. ¥ Manages the mechanics of the meetings ensuring that everyone sticks to the points at hand; give everyone the opportunity to speak and may have a second or casting vote when a majority decision cannot be reached. ¥ Guides the timing of the meetings by raising for discussion or contemplation, all agenda points, in a structured manner. ¥ Decides when the next meeting is going to take place (usually done with a mutual vote but made official by the president), ¥ Plans activities (usually done in consultation with club members). ¥ Confirms minutes of the Management Committee meetings. ¥ Signs as official signatory to the Club bank account, together with the finance secretary, and another member of the club.
  • 66. Ojijo’s Investment Clubs Manual!  Deputy President & Education and Research officer 139The vice president can also be known as the assistant presiding partner. The vice Page president is the member that stands in when the president is absent or needs help with presidential duties. The vice president is also the one responsible for organizing educational activities such as guest speakers, reading materials, field trips, assigned reading, and presentations that have to do with investing. Some skills required on the road from amateur to sophisticated investor might involve learning how to read an annual report, calculating financial performance ratios, and understanding various stock valuation methods.  Finance OfficerThe finance officer is also known as the financial partner. The Finance Officer administers to the clubs finances and is responsible for the accurate reporting of the clubs financial position. In detail, her roles include: ¥ Recording all financial transactions and supplying a breakdown of the clubs Assets, Liabilities, Bank balance and Unit Valuations. ¥ Handling all Tax affairs for the club and ensure that all necessary Tax forms are sent to members so that they can declare any capital gains/losses for the year. ¥ Compiling and presenting monthly and year end reports covering the ins and outs of the clubs funds in the Cash Account, the Capital Account and the Asset Register. ¥ Dealing with the brokerage firm and buying and the selling of stock. ¥ Keeping accurate records of the financial holdings of the club, the financial contributions of each of the members, and any other records that concern with money and financial matters.  SecretaryThe secretary is also known as the Recording Partner. The secretary is responsible forthe following duties: ¥ Making sure that all official club notices are sent out to the right people at the right time. ¥ Sending out agendas and minutes of all meetings to the membership. ¥ Recording minutes (notes) of what is said and decisions made at all meetings. ¥ Making available to the members, all official documents and reports. ¥ Compiling the minutes of the next meeting taking into account any topic put forward by any member who requests that the topic be discussed. ¥ Making sure that the time, date and venue of the next meeting is known to all members and ensures that all resources are in place that will enable a successful meeting to take place.
  • 67. Ojijo’s Investment Clubs Manual! ¥ If a member misses a meeting the secretary is the one who passes the minutes of the last meeting to the absent member so that everyone is kept up to date of all meeting 139 decisions. Page  Social SecretarySocial secretary is also known as events secretary. She has the following roles: ¥ Organizing social event for the club, including sports, parties, orphanage visits and fun activities. ¥ In charge of advertising. ¥ In charge of public relations. ¥ In charge of forging relations and communicating with partners and sponsors.  The Auditor (External)The role of the Auditor is to check for accuracy and sign off everything the Finance Officer has done over the year. The specific roles will be to take care of and report the following issues; ¥ Ensuring that the actual share/investment vehicle value-holding is correct as measured against the share index listings at the time. ¥ Confirming that all reported Bank Balances are correct by checking against monthly Bank Statements. (Copies of all Bank Statements should be sent to the Auditor, monthly). ¥ Ensuring that all assets checked against supporting purchases, sales, capital gains and dividends annually, and liabilities are checked against assets. ¥ Checking receipts and receipting member’s subscriptions, interest from bank deposits and dividends paid, Bank and Stockbroker statements from share ownership etc ¥ Validating and checking accuracy of Payments for Shares etc against monthly meeting minutes and Stockbroker statements. Any other expenditure should be checked against supporting documentation and authority given. ¥ Checking the opening balances of units and cash to the previous monthly statement. Confirming deposits or withdrawals to the bank account. ¥ Reporting on the unit value to the assets statement of the previous month. ¥ Checking the calculation of units bought/sold and value per unit. ¥ Confirming that the total value of the investments appears reasonable (a full valuation is only performed annually or on a member leaving the club) ¥ Agreeing the issued units to the total of the members capital accounts  The Investment Strategy CommitteeAn Investment Strategy Committee of at least 3 members, including the finance secretary, takes investment decisions between meetings. Reasons for these investment decisions could include: ¥ The sale of underperforming equity or other holdings.
  • 68. Ojijo’s Investment Clubs Manual! ¥ To act quickly on buy, hold or sell recommendations from the club’s Stockbroker or other information source. 139 ¥ The discovery of an investment vehicle that would complement the club’s portfolio or increase the chances of success of the club’s overall investment strategy. Page o Dispute ResolutionConflict is actual or perceived opposition of needs, values and interests. Conflicts are common nature of all relationships. Often a group finds itself in conflict over facts, goals, methods or values. However, a conflict can be, and should be, win- win, where both parties get what they want, and not win-lose where one party gets what they want, or lose-lose, where both parties do not get what they want. However, without proper social arrangement or resolution, conflicts in social settings can result in verbal confrontation, physical fighting or lack of cooperation. The investment club hence needs a clear dispute resolution mechanism for conflict resolution.Any disputes as to the interpretation of the club rules should be decided by the Chairperson unless notice is served requesting that the mater should be resolved by a Special General Meeting of club members. Any disputes relating to the valuation of a members share in the assets of the club or his/her entitlement to that share should be decided by a chartered accountant (to be appointed by the Chairperson of the club) of at least seven years standing whose certificate of decision should be final. Fees incurred in obtaining this decision should be paid by the party to the dispute against whom the decision is made, or in the case of this not being clear the fees should be shared between the club and the member or ex-member concerned. However, all disputes should first be mediated in good faith. o Decision MakingDecisions made at all meetings will be made on a one member one vote basis. However, in case of a tie, then the chairman/president may cast deciding vote. o Club Member ResponsibilityWhen I join an investment club, (which usually should range from 12 to 18 members), each participant assumes a particular role. I may be the group leader, or part of a stock selection committee. The club should give every member the responsibility of researching a specific stock or an entire market sector and making a report at each meeting.Each member of an investment club is expected to participate by:
  • 69. Ojijo’s Investment Clubs Manual! ¥ Attending each meeting; ¥ Making monthly contributions 139 ¥ Researching and following the progress of a particular stock or family of stocks that the Club has bought or is considering for purchase. Page ¥ Researching securities and presenting the data to the rest of the group. ¥ Participating in ongoing buy and sell decisions. ¥ Tracking and reporting overall portfolio performance. ¥ Accurate management and reporting of personal taxes. o Investment Club RulesInvestment clubs are a great way to get into investing and to learn more about investing. It is also a way for me to develop some great friendships and have fun with my finances. One of the most important parts of an investment club is the rules. Investment club rules cover everything from the actual act of investing to how the club is run. The rules help to keep everything orderly and help to ensure that everyone has a good investment experience. ¥ Partnerships & SponsorshipsThe Investment Club needs to build up partnerships with a number of well established companies, who will support the club greatly through their sponsorship and or advice. o SponsorsThe Investment Club should have very good relationships with the top investment banks. These relationships guarantee members access to recruitment events and exclusive exposure to the employees of these institutions. They also allow invitation of professional analysts or economists to hold talks for the investment club members. Relationship with club sponsors should be based on mutual understanding and trust, and all sponsorship activities should be pursued with the utmost dedication and passion. The investment club should also diversify sponsorship base, and move toward specialist firms. Furthermore, a mix of small and big firms is also necessary. Ultimately, the investment club should strive to ensure that club sponsors get enhanced value from the Club and that any relationship can go forward for years to come. o PartnersPartners to an investment club contribute to the development of the clubs programs, the realization of its objectives and the mutual development of the club members and the partner. In some cases, partners routinely take on interns for their programs every year and given partners’ varied business areas; they are keen to
  • 70. Ojijo’s Investment Clubs Manual!take on interns whose interest ranges from investment management totechnology and to risk management. Partners also hold exclusive investment 139networking events. They also come to the main meetings to have an interactivediscussion with our members regarding the stocks we hold, why we hold them, Pageand to evaluate our performance of our fund.
  • 71. Ojijo’s Investment Clubs Manual!LEARNING/EDUCATION 139As time passes and members become more experienced and knowledgeable about Page investing, the club will want to increase the intensity of the club education program. There are different ways to educate investment club members to help them learn more about investing. Most investment clubs spend a fantastic deal of effort and time in study since a well-researched investment plan includes a lot higher opportunity of accomplishment. ¥ ResearchWhile clubs are certainly interested in making a profit, investment clubs are also a great way to learn about investing. All purchases are carefully considered and well researched by the members. Even before researching individual investments, members of an investment club should familiarize themselves with different investing options and ideas on a regular basis. Club members should seek to explore new ideas and discuss investing issues. Individual members need to develop a ‘researching’ culture where each member of the club makes monthly or quarterly recommendations on new investment ideas. In one meeting, a member might present his/her findings on investing using a particular vehicle, say Treasury bills, and another meeting, a member might report on a book about a prominent local investor.Over time, the club might be learning other ways of valuing shares and discussing interviews published in newspapers regarding the performance of a listed company. Another way to learn is the opportunity to bounce thoughts off others and get some additional perspectives besides learning from other seasoned investors who have expertise in areas members might be ignorant about. Ideally, the members do research and report on promising companies and on those the group has already invested in. Members also read articles about stocks, hunt down information about other companies on the Internet, and generally are willing to contribute pertinent and useful tidbits to the club. • Educational Materials/LibraryWhen my investment club is just starting out, I will want to find educational material that is going to give all the members an overview of how investing works. No matter where I am in the level of education material that I am looking at, I will want to have a definite plan about what I want to learn. The club library should contain all the presentations given to the club at the various weekly meetings or special events. These should also be uploaded on the website for all club members to download. The library materials include magazines, pod casts, video on rich and wealth building, reading lists, etc, that aid members in making investment decisions.
  • 72. Ojijo’s Investment Clubs Manual! ¥ Guest Speakers 139The investment club should regularly ask a guest speaker to the meetings to give members a firsthand experience of the investing world. This is a great way to get Page information for every investment club. Experienced investors can give an overview of their own investing guidelines and advice. In the long run this can give my investment club some great new ideas of how to invest our monthly contributions. And the more ideas that we have the more investment incentives we will have. Clubs that maximize the educational aspects of their meetings usually find that profits follow. With an educational component in the forefront, investment clubs can be a great vehicle for beginning investors. ¥ Field TripsA field trip or excursion is a journey by a group of people to a place away from their normal environment. The purpose of the trip is usually observation for education, non-experimental research or to provide club members with experiences outside their everyday activities, such as visiting the trading floor of the stock exchange, or the various regulatory offices of the stock market system, such as Capital Markets Authority. To mitigate these risks and expenses, the club should have formalized field trip procedures that consider the entire trip from estimation, approval and scheduling through planning the actual trip and post-trip activities. € CAPITAL MARKETS AUTHORITY (CMA): a semi autonomous body established by statute to regulate and promote the development of the capital markets industry, with the overall objectives of investor protection and market efficiency. • Assigned Reading & PresentationsThe club members should also be given or they should choose an area of interest to research, or book to read, and then they get back to do a presentation to the club in the subsequent meeting. Generally, three or four people should read the same book or area for extensive analysis.
  • 73. Ojijo’s Investment Clubs Manual!INVESTMENT/EARNING 139For the club to invest successfully, the policy of obtaining, investing and use of Page returns on investment must be clearly stated and followed. The following concepts should be understood by club members: • How the Capital Market OperatesThe stock exchanges operate a dual trading process. Firstly members trade securities directly with investors and among themselves. Secondly, trading sessions are conducted at the trading floors of the stock exchanges. Under the second option, in Rwanda and Uganda, traders use the open cry method; but Kenya and Tanzania have an electronic trading system allowing the traders to trade from their offices. Open cry method is where the traders, being stock brokers, shout bids and asks for prices of bonds in the floor of the trading houses. • How to Buy SecuritiesThe process of buying bonds or shares £ Visit a stockbroker (member) of the stock exchange, but also registered with capital markets £ Open an investment/brokerage account £ Make payment or deposit funds into an investment account the money equivalent of the number of shares to be bought, and get an acknowledgement from the stockbroker (receipt) £ The Dealer/Broker will deposit the money so received in a Trust (nominee) a/c- an account specifically opened by the brokers to keep clients money intended for stock exchange transactions. It is a requirement that for local orders, payment is made upfront by the investor £ Sign a purchase order or instruction to authorize the stockbroker to buy shares or bonds £ Give instruction on which securities (bonds, shares, etc) to be bought and from which company (listed company), and at what price (ordered price) £ Sign purchase transfer form to allow the securities to be transferred to the clubs account £ Follow up the order after 24 hours £ The selected dealer will post the order (bid) on the trading board on the following trading day. When the bid matches an offer (an order to sell) by either the same broker or other brokers, then the transaction is considered to have been concluded
  • 74. Ojijo’s Investment Clubs Manual!£ CMA sends matched transfers to the Registrar for registration and change of ownership 139£ Registrar transfers ownership from the seller to the buyer Page • How to Sell Securities £ Visit a stockbroker (member) of the stock exchange, but also registered with capital markets £ Open an investment/brokerage account £ Deposit the securities with the stockbroker and get an acknowledgement from the stockbroker £ Surrender the share certificate to the Licensed Brokers/Dealers and conclude the process of opening up an account at the Central Depository System (CDS) £ The Licensed Brokers/Dealers will have to verify the validity of the certificate with the issuer (The verification process takes less than a day), one of the listed companies and deposit the shares/bonds in the CDS. £ Sign a sell order or instruction to authorize the stock broker to sell £ Sign a sell transfer form £ Give instruction on the price of selling the securities (ordered price) £ Follow up the order after 24 hours £ The Licensed Brokers/Dealers, having opened a CDS account for the client, deposited the shares therein and verified the certificate, will then come to the stock exchange Trading Floor and post the offer on the board. The dealer will post the order (bid) on the trading board on the following trading day. When the bid matches an offer (an order to sell) by either the same broker or other brokers, then the transaction is considered to have been concluded. £ When the offer equals a bid price quotation, the transaction is considered to have been concluded, and the shares will have been sold. £ CMA sends matched transfers to the Registrar for registration and change of ownership £ Registrar transfers ownership from the seller to the buyer.
  • 75. Ojijo’s Investment Clubs Manual! • Types of Orders 139A client may instruct a broker to process several types of orders. An order may be; Page € A LIMIT ORDER: An order which has a specified price when it is posted for execution; or € A MARKET ORDER: An order, which does not have a specific price when posted for execution. This type of an order must be executed promptly at the best price obtainable and will have priority over limit order at the same price levels .It assumes an initial price limit value normally based on the price most advantageous in the market. A market order trades through a range of prices starting at the best price in the market. € ALL OR NONE (AON): A stipulation to either a buy or a sell order which instructs the broker to either fill the order in its entirety or to fill none at all, the customer will not accept a partial. € ASKED PRICE: The lowest price that anyone has declared that he will sell his security for at a given time. In over-the-counter stocks, the "ask" is the best quoted price at which a Market Maker is willing to sell a stock. € BID PRICE: The highest price anyone has declared that he wants to pay for a security at a given time. € CANCEL: Instruction given to a broker to stop work on an order previously given. If part of the order has already been executed, a cancel instruction stops work on the remainder of the order. € DAY ORDER: An order to buy or sell which, if not executed, expires at the end of the trading day it was entered. € DO NOT REDUCE (DNR): Stipulation to order that instructs the broker not to decrease the limit price on buy-limit and sell-stop orders on the record date of a cash dividend. € FILL OR KILL (FOK): An order stipulation instructing the broker to present the order in the marketplace and either fill it in its entirety or kill it if it cannot be filled immediately at its stipulated price limit. € GOOD DELIVERY: Designation meaning a certificate has the necessary endorsements and meets all requirements so that title can be transferred by delivery on the settlement date to the buying broker. € OPEN ORDER/GOOD TIL CANCELED (GTC): An order to buy or sell which remains in effect until it is either executed or canceled. For GTC orders executed over several days, a commission is charged based on each days activity. Customers are responsible for monitoring GTC orders to avoid duplication. Open orders placed electronically expire automatically after one calendar month. € SETTLEMENT DATE: Date on which a securities transaction must be settled. Buy orders must be paid for in cash and sell orders must have securities in legal (good) delivery form presented to the new owner. € REGULAR WAY SETTLEMENT of stock and bond transactions is three business days after the trade was executed. Listed options, government
  • 76. Ojijo’s Investment Clubs Manual! securities and mutual funds settle the next business day following the transaction. The brokerage firm representing the customer must settle on the 139 specified settlement date whether or not the customer has paid the monies or delivered securities to the firm. Page • Benefits & RisksThe following are the advantages of the capital markets; ℘ Savings: Investing in securities that are listed in the Capital or Stock market encourages investors to accumulate their savings in small amounts over time ℘ Income: Investment in the stock market provides a source of income. Shares pay dividend income when companies declare profits and decide to distribute part of the profits to shareholders. Bonds pay an interest income to the bondholders. Sometimes the income earned from listed securities is higher than interest earned from the money or banking sector. ℘ Wealth or Capital gain: Whenever the prices of securities listed in the market go up, the value of the investment of the holders of those securities increases. This is called capital gain and is an important way of growing wealth through the stock market. It is important to note that a one –off investment in the Capital market does not make sense. It is therefore the accumulative investment over time that creates opportunities for growth in wealth through the Capital Market. € CAPITAL GAIN: The gain (selling price minus cost basis) on an asset. € COST BASIS: for tax purposes, the cost of an asset (including commissions and other fees) used to determine the gain or loss. ℘ Securities as Collateral: Listed securities are easily acceptable as collateral against loans from financial institutions. ℘ Liquidity: Liquidity is the ability to convert shares or bonds into cash by selling within the shortest time possible without losing much value. When one needs funds urgently, listed securities could be very useful because they are more liquid than most other forms of assets. ℘ Ease of reinvestment of income: Through automatic Dividend Reinvestment Plans (DRiPS), the stock brokers can easily reinvest the returns.Despite the above advantages, there are no guarantees to returns on investments as prices of stocks or bonds will always rise and fall and sometime, investors could lose wealth in the capital market. It is therefore wise to seek advice before investing in stocks.
  • 77. Ojijo’s Investment Clubs Manual! • Choosing a Stockbroker (Full Time Vis-À-Vis Discount) 139Buying a stock for the first time requires that the club has a stock broker. Before anyone buys stocks, they need to choose a stockbroker. Page € A STOCK BROKER /STOCKBROKER is a regulated professional broker who buys and sells shares and other securities through market makers or Agency Only Firms on behalf of investors. A broker may be employed by a brokerage firm.There are two types of stockbrokers: a full-service broker and a discount broker. A full- service broker offers investment advice whereas a discount broker solely takes care of executing stock orders.Choosing brokers depends on the following: Commissions: Although the largest difference in between traditional and discount brokers is the cost of each transaction, differences in commission prices between two firms of the same kind can be tremendous. In some cases, the higher price means better service, faster execution (i.e., our buy and sell orders are carried out in a shorter period of time), and more perks, but this is not always the case. That is why it is important to look around and compare brokerage firms before the club opens an account. Minimum Opening Balance and Maintenance Fees: Each broker has a minimum opening balance requirement. Some are as low as $50, most are around $1,000, and several are higher. Some brokerage firms may have a low opening balance but will charge us a maintenance fee if our balance falls below a certain amount. Although the fee may be little, it can significantly eat up our investment returns if we are just starting out. Services, Perks, Research, and Investment Tools: No broker offers the exact same set of tools, research, and perks to their customers. Some will allow us to instantly log in to our account via the Internet and print out an analysis of our portfolio, view the balance of our account for the past six months, check our realized and unrealized gains, and view dividend records for the past few years. Others may be slim on features such as this, but offer amazing research that we cannot get elsewhere. I will have to decide if I want to trade low price for customer service. Credit Cards: Lately, a lot of brokerages have begun offering Visa Check Cards which work exactly like a credit card. The difference is that the money we spend is taken directly out of our brokerage account. This way, we have the combined functionality of a checking /savings /money market account with a stocks / bonds investment account. It is tremendously convenient and can help simplify the club’s finances. If we are looking for an all-in-one solution, an asset management account may be a more attractive alternative.
  • 78. Ojijo’s Investment Clubs Manual! Number of days: It is important that orders are executed immediately, and so, this is an important point to note when getting the stockbroker. 139  Full Service/Traditional Broker PageThis broker guides investment clubs and offers advice at the occasional meetings. Some clubs have traditionally favored full-service brokers who will provide some advice and guidance and perhaps even attend meetings on occasion. If we decide to open an account with a traditional brokerage firm, we will work one-on-one with a personal stock broker. He will offer investment ideas, prepare reports about our portfolio, give us a run-down of how well our investments are doing, and generally be available with a single phone call or email to buy or sell stocks, bonds, mutual funds, or other investments for our account. In addition, traditional brokers offer a variety of different research sources to their customers. In exchange for this one-on-one service and guidance, we will be charged a significantly higher commission.  Discount BrokersIf I do not want to use a broker on a full-time basis I can use what is known as a discount broker. Using a full-service broker essentially defeats the purpose of forming a club, which is to benefit from the work and collective efforts of the group rather than relying on the advice of a broker. Since clubs are self-reliant and self- directed, there is no need to pay hefty commissions to full-service brokerages. A discount broker will give me some detailed information about stocks but will not give me advice about what to sell or buy. Using a discount broker seems to be the more popular choice since the purpose of the investment club is to make my own decisions about what stocks I am going to be dealing with. When I use a discount broker I will not have to pay a huge commission to a full time broker. My club will have to take a vote and decide what is in the interest of the majority.Discount brokers may offer some research, but they will not tell me what to buy or sell. Discount brokers are geared toward the do-it-yourself investor. They will simply execute orders once weve decided to buy or sell an investment. Instead of working with the same stock broker, we will do most of our trading online, or if we decide to call in our order with the first available broker. Recently, discount firms have been offering research that is on par with those offered at the traditional full service brokerage firms. We may also want to think about using the services of an online broker.  Online Discount BrokersThe club should consider taking advantage of the incredibly low commissions offered for online trading by online discount brokers. Online discount brokers will have low commissions that can be a benefit to my club. My investment club should delegate one or two members to find the best discount brokers that they
  • 79. Ojijo’s Investment Clubs Manual! can find, both on the Internet and locally. There are a few things that I should keep in mind when I am looking for a discount broker, namely, the customer 139 service that the broker offers; fees and other incentives, like research, to hire the broker. PageWhen I am looking for a broker and basing my decision on customer service I will want to take some time looking at the broker’s website. I will want to make sure that the website is easy to use and easy to navigate. I will want to know what type of customer service the broker offers. I will soon be able to make my decision about customer service after I conduct my first trade with the broker. I will make sure I find out if there are any other incentives offered that make me want to hire the broker.Other perks that an online broker may offer that can be of benefit to my investment club include educational books and materials to buy at a discounted price or to read online or a discount on my first trade. • Opening the Brokerage AccountBefore we can begin investing, the club must open a brokerage account. All brokerage firms deal in basic securities, including buying and selling stocks and bonds on behalf of their clients. Some brokers execute orders for additional investment products, such as options and futures contracts. € FUTURES: Exchange-standardized contracts for the purchase or sale of a commodity at a future date. € FUTURES CONTRACT: A standardized, exchange-traded contract to make or take delivery of a particular type and grade of commodity at an agreed upon place and point in the future. Futures contracts are transferable between parties. € OPTION: A right to buy (call) or sell (put) a fixed amount of a given stock. € OPTION PREMIUM: The amount per share paid by an option buyer to the seller. An option premium that is quoted at 2 1/8 means an option buyer would pay $212.50 for an option contract controlling 100 shares.  Open Demo AccountsInstead of jumping into full-fledged trading, the club could begin with opening a demo account. During this time, the members should ask a lot of questions to get familiar with the broker and the trading process. This would allow us to get a feel of the customer service support different brokers offer.  The Brokerage AccountThe first step to building our portfolio is to open a brokerage account. A brokerage account is also called a trading account, and is an account that allows my Investment club to buy and sell investments online and by phone, and hold
  • 80. Ojijo’s Investment Clubs Manual! investments on our behalf. It is an account similar to a traditional bank account, holding cash and securities, and a number of other types of investments, and is 139 administered by an investment dealer. We pay the stock brokers/professionals to buy or sell the items we tell them to, and we pay them a fee called a Page "commission", which is usually a percentage. The price difference arises when we choose between a discount and traditional broker. Most offer the option of either having an application form sent to us, or allowing us to fill them out online, print them, and mail them in with a check. The process is easy and can be done fairly quickly at almost all financial institutions. The club will have three nominated people who are able to actively trade on the account, however all members can login and view the account at any time. When the club starts using a number of different trading strategies or have a number of brokerage accounts, we may separate our accounts in order to avoid confusion.One account may be a registered account for our retirement savings; another account may be a buy-and-hold account for our long-term stocks; another may be a Margin Account; and another may be a trading account used for conducting day- trading activities. Once we have opened an account, we have the ability to start investing our money. All brokerages give us the option of setting up automatic monthly withdrawals, which will transfer an amount we specify each month from our savings or checking account to our brokerage account. This can be an easy way to start building up our equity; if we do not see it, we will not spend it. Furthermore, this option is very good for the individual salaried investor. Since we will not notice the money that is missing each month, saving will be relatively painless. € MARGIN ACCOUNT: Brokerage account allowing customers to buy securities with money borrowed from the broker. A signed MARGIN AGREEMENT is a prerequisite to establishing a margin account. • Nomination of SharesMembers should only nominate shares for purchase if attending a meeting. Members can only vote on club matters by proxy if they know in advance what is being nominated or proposed, this to be confirmed in writing and submitted to the club. Further, any member wishing to nominate a share for consideration should present some reasoning to support his nomination. Again, if possible, a member nominating buying of shares should give information prior to the meeting using the clubs web site mailing list. Before any stock is purchased or sold it will be required that all members of the investment club are part of the study of these stocks and part of the final decision. Investments may be made in blocks so as to satisfy the rationale of pooling. The club should also agree on the block amount for investment. However, the club is not bound to make purchases or sales at any meeting, and neither is it a must to purchase or sell in blocks.
  • 81. Ojijo’s Investment Clubs Manual!  Stop Loss Policy 139The club should have a stop loss policy to prevent further loss of revenue and returns. The general policy is hence +20%. Generally, a share should be sold Page where it has gained or where a share price increases by 20% from the original purchase price a trailing stop loss to be set at 20% below the current price. When a share price decreases by 20% from the original purchase price the share should be automatically sold without prior notification to club members.  Clubs PortfolioThe Clubs portfolio is determined by the members. A designated member deals with the Clubs broker to execute buy and sell orders; the value of each members share is determined by her capital contributions to the Club and the total value of the Club’s portfolio. There are Club accounting guidelines and softwares that will help with the bookkeeping, and make it possible to keep track of partners who invest different amounts each month. An Investment Club depends on the involvement of all its members; there are no silent partners in successful clubs. Everyone should participate in an Investment Club. The only requirements are a willingness to work and participate; and the ability to get along with the other members of the Club.Members should make a long-term commitment, and the partners usually decide to include a clause that addresses the early withdrawal of funds (other than in the case of unusual circumstances). The liquidation value (if you said, ‘get me out of this Club and give me my money back) of most Clubs will often be less than the capital contributions of its members during the first year or two. For most clubs, members contribute USD 50 for starting, monthly. The investment club should agree on what percentage of portfolio value should be in any one category, sector or industry. For instance, Club should invest its assets in a combination of stocks and shares, listed on either the Main Market or the Alternative Investment Market of the Stock Exchange, and any cash held in a Bank Account, with not more than 20% of its portfolio value in particular segment of the market € ALTERNATIVE INVESTMENT MARKET is market for the stocks (shares) of small growing companies which cannot afford the expense of a full listing on the Stock Exchange. The fully listed companies trade in the MIAN MARKET € SECTOR: A group of stocks often related to a particular industry that has certain shared characteristics.  Analyzing the Market and the Market ConditionsThere are different styles and types of investors that exist in the stock market. Investors use the stock market to build their investment portfolio so that they can see a long term profit that takes place over a long period of time. Someone who is
  • 82. Ojijo’s Investment Clubs Manual! just using the stock market to make money quickly for a short period of time is called a "trader". Members of an investment group are in the investment market 139 for the long haul. They are called ‘investors’. The different types of investors use different methods to analyze the market and the market conditions. PageThe three common methods of analyzing the market are: $ TECHNICAL ANALYSIS. This method of analysis is used by a "momentum" investor. Technical analysis looks at the price fluctuations that occur in the stock market. The investor bases the decision to buy or sell on what he feels the price will do next. $ FUNDAMENTAL ANALYSIS #1. Fundamental analysis is used by the "growth" investor. This type of analysis decides if a certain company is a good investment based on the earnings of the company, growth sales, and margins of profit. $ FUNDAMENTAL ANALYSIS #2. A "value" investor uses this type of analysis. This method of analysis is similar to the analysis that a growth investor uses but is slightly different. A value investor takes a close look at those companies in the stock market that have a low value, whose stocks are currently cheap but that have the potential to make a good comeback.Most stock investment clubs use the fundamental method of analysis to make most of their investing decisions. They find companies that are listed on the stock market that show good growth, profit, and earnings but that are still cheap to buy and haven’t yet reached their potential. Members of the investment club buy this stock and hold on to it for several years so long as the fundamentals, as listed previously, continue to hold strong. This type of investment strategy is called "buy and hold". • Online TradingWhen we buy and sell stocks online, we are using an online broker that largely takes the place of a human broker. Some online brokerages offer advice from live brokers and broker-assisted trades as part of their service, but otherwise, they are discount firms. If we need a broker to help us with our trades, we will need to choose a firm that offers that service. Since the invention of Internet people have been able to do practically everything virtually. But if debt free advice is required, we must seek quality advice.Due to the Internet online trading has become one of the most popular ways to trade since stock trading turned out to be as available to independent investors as possible. Online trading gives both beginners who have just had a single day trading course and advanced traders an opportunity to trade stocks, options, forex and futures all over the world without physical presence of a broker and with
  • 83. Ojijo’s Investment Clubs Manual! much lower commissions, because everything is done online. In order to trade online, we will have to open our online account and choose online trading 139 software. When we choose a certain website for our future account, we should search for information about a company we are going to fix upon and make sure Page that it has a trustworthy reputation. The same refers to choosing online trading software, platform and online trading portal. € ONLINE PORTAL is a website system which gives both traders and brokers an access to a great variety of financial news and information which enable traders to take their decisions. These various financial services are provided by a great number of different companies.Online trading is a perfect opportunity to trade and earn money but before we start trading, we should find out more about online trading pros and cons, online trading concepts and of course about online trading tips. Knowledge is a main key for the club’s successful online trading. We should ensure that the club’s finances are structured accordingly before we hit the trading floors online. • Investment Club Accounting  Investment Club AccountInvestment Club Account allows entrepreneurs (both existing and potential) to pool their savings and invest to become rich. Members agree on a monthly contribution based on their disposable income. Members also sign a constitution or bye-laws governing their investment club. The sole purpose of an investment club account is to save money for the purpose of future investment. An investment club account is NOT a gifting circle or pyramid scheme which keeps recruiting members with the purpose of crediting the accounts of recruiters.The clubs bank should be determined annually at the Annual General Meeting but may be changed by agreement of a majority of members at a Special General Meeting called in accordance with club rules. All cheques drawn on the clubs account(s) should require any three of five authorized signatures. Where possible one of the signatories of the cheques should be the chairperson. In the event of one authorised signatory being unavailable for an extended period, the officers of the club may authorise a further signatory for the period involved. All income should be paid direct into the clubs bank account(s) except where members have approved an arrangement whereby their stockbroker retains funds from the sale of one or more investments pending the purchase of other investments.  Monthly AccountsThe accounts should be compiled on a monthly basis on the last day of the month using an accounting software package. These monthly accounts are reported in the following monthly meeting. The auditor’s reports should also be availed to members of the club. The report should also include the tax reports. The correct
  • 84. Ojijo’s Investment Clubs Manual! tax forms are issued by the member in charge of the taxation for the club, who should be the finance officer. The Finance Officers monthly report should include 139 as minimum the current value of each of the clubs investments together with a total value of such investments, a statement of unpaid accounts and cash in hand Page on the aforesaid day, the total value of the clubs assets and the current unit value which should be determined by dividing the total net asset value by the total number of units issued to members.  Investment Club Accounting SoftwareInvestment clubs deal with a lot of money, especially if it is one that facilitates investment partnerships among its members. Some of the accounting tasks are membership dues, paying dividends; distributing incomes, monitoring the exchange of shares, recording individual gains and losses, and more. We need to be equipped with the proper accounting tools so that when our club grows, we are flexible enough to grow with it. Whereas manual accounting would have the finance officer do each step of a complicated system, automated accounting does the entire process in just a fraction of the time- freeing up time to handle more important matters, reducing errors, and making the investment club operations smoother and easier. Accounting software is a technology made for an investment club.An investment club accounting software can handle individual and organization-wide transactions effortlessly. Accounting for dividends, individual contributions, one- off contributions, and the club’s total capital would no longer be something that would make us want to tear our hair out. Additionally, these software programs do not just account for the finances of the group. Because it is a technology made for an investment club, the club accounting software is expected to manage the organization as well. This means that it keeps track of the members effectively whether they’re newcomers or outgoing affiliates. The software would make sure that each member is synced with an investment portfolio so that individual activities are monitored accurately. Some accounting software even offer a feature that keeps the members informed of the club’s latest news.An Investment Club Accounting Software is typically used to manage: $ Member Subscriptions $ Ownership / Unit Valuation System $ Investment Transactions $ Financial Reports $ Income / Expenditure transactions $ Performance reports $ Manage tax returns
  • 85. Ojijo’s Investment Clubs Manual!Finally, investment club accounting software can also add value to my group instead of being just a tool in the background that supports operations. The best 139 investment club software can generate my organization’s official website that features a community forum. As technology continues to break barriers, it would Page be no surprise if all investment clubs in the future would opt for online meetings with partners they’ve never met. And with the right investment club software, the club will be ready for whatever is in store for the industry.  Investment Club TaxWith the right group of people an investment club can be both a profitable and enjoyable venture. However, the business end of investment clubs is not completely fancy-free and there is much club members will have to familiarize themselves with in terms of investment club tax if we want to maintain a legal, operating investment club. The club will have to have its own "EIN" or employer identification number. This is for tax purposes and so it is imperative that the club register from the social security administration office. These help to avoid any future tax problems. The next step I will need to do is determine whether my club is a corporation or a partnership. In a partnership, I am taxed on individually, whereas in a corporation, I am taxed twice, both as the corporation, and on the income I carry home.  Members AccountsAn account should be kept for each member of the club showing: the total investment made by each member by means of subscription, initial lump-sum and/or additional purchases of units, the total of withdrawals made by each member who has sold back units to the club; the total number of units currently held by the member and the current value of his/her holding.  Running CostsThe purchase and use of periodicals, newspapers, and other media and materials to be used for investigative and research purposes by the club, should have the agreement of members. The question of whether the cost should be provided personally by members or by the club should require the agreement of members in a vote.Members should be compensated and indemnified for providing services to the club as a principle of partnership. Expenses incurred in managing the club should be recorded in the clubs cash account which should be funded from the clubs subscription and other income.
  • 86. Ojijo’s Investment Clubs Manual!JOINING AN INVESTMENT CLUB 139Since most investment clubs are already well established, it is highly ideal to find Page and join one that can yield me the most benefits that are actually useful to me. If I am considering joining an investment club, then I must consider the following issues:HOW IS IT ORGANIZED/ADMINISTRATION? ¥ Is It a Member of a Club Association?InformedInvestors Program, a Regional (East Africa) Investor Education Centre, offers some excellent support and information for people wishing to join or start their own investment clubs in East Africa and beyond. InformedInvestors Program not only provides excellent tools, but also publishes a weekly email-newsletter to all subscribers. Annual membership to the InformedInvestors costs $45 for a new club, $30 for individual club members and $60 for individuals. The number of investment clubs registered with the association has seen strong growth since the founding of informed investors in 2010, and, to the chagrin of industry professionals, about half of all registered clubs have been able to outperform major indices and exceed the returns of most mutual funds. That being the case, however, market-beating returns do not contain all of the value a member receives from a well-run investment club. ¥ What Is Its Mission, Objective and Goal?The mission of an investment club is to provide a program of sound investment information, networking, education, and support that helps create successful lifetime investors and financially free individuals. The objective of the investment club is to pool money to invest in another venture to make more money. The goals of an investment club are to educate members about the world of finance; give them real-life experience in trading stocks, provide opportunities to network with some of the most prestigious firms, and help them pursue careers in the financial services industry. ¥ Is It Legal?Many investment clubs are in fact modern day scams that only exist for the sheer pleasure of separating me from my hard earned money. I will need to determine whether the club is a duly registered association, a corporation, cooperative or a partnership.Further, to be assured as to the legal status, I should read its polices, rules and regulations. I need to have the patience to read the fine print on everything, from
  • 87. Ojijo’s Investment Clubs Manual! my clubs charter to its bylaws and policies on duties and rights. It must be very clear what the members’ duties and responsibilities are. 139 ¥ Does it Hold Meetings? PageAn investment club is a group of people who meet together to learn about investment strategies and concepts, to network, and to invest. The club I wish to join must have a record of meeting, indicating the research of members, the decisions taken, the networking functions attended and even the books read.Further, any investment club worth their investments should be able to afford a get- together with friends of members and networking events.IS IT NETWORKING?Further, I should confirm is the club meets for social events, and with what frequency such events occur. Part of the networking is done through learning events, either through guest speakers, research presentation by members, or through site visits to various investment organizations, including companies or government offices. Hence I should confirm that there are networking events, fun events, and learning events, before I join the club.IS IT EARNING? ¥ Are They Making Profits?The business of business is business. The purpose of clubs is to make money, not welfare. I will want to be aware of the financial history of the group that I am considering becoming a part of. Any kind of investment club is obliged to have a long and healthy paper trail of tax and Social Security forms behind it and this is where I can truly distinguish the big ballers from the small league players. If the group that I am interested in is acting a bit fuzzy when it comes to records then I can be reasonably sure that something is not right. It is in these instances that the best option is to simply run away.An ideal private investment club is one that has returns that are both real and able to be boasted about. An investment club that does not have anything to brag about must be approached with caution. If the club has nothing of the sort then I can be reasonably confident that they are small-time or possibly even dishonest. ¥ Does It Practice the Fundamental Principles of Investing?Before I join an investment club, I should confirm that it is practicing The Ojijo 9, i.e, The Nine Fundamental Principles of Investing as stipulated in this guide, which when followed, will lead to successful investing and becoming rich and financially independent. The principles are:
  • 88. Ojijo’s Investment Clubs Manual!1. Dreaming, Thinking Big & Goal Setting: This involves painting the picture of financial freedom that I want to have, and writing what I must do to get there. 1392. Budgeting: The club members and the club generally should plan all expenses and investments before any money leaves the bank account. Page3. Saving: The club members, or investors, and the club, should accumulate money through savings in order to invest.4. Long-Term Investing-The club should have a three-year plus investment outlook.5. Portfolio Diversification-The club should diversify its portfolio so as to spread risk.6. Dollar Cost Averaging-The club should be investing monthly, regularly.7. Risk-Tolerance- The clubs investment decisions should be alive to the risks.8. Knowledge-Based Investing-The club members must have a continuous learning culture9. Compounding- The club should compound its investments and earnings.
  • 89. Ojijo’s Investment Clubs Manual!STARTING AN INVESTMENTS CLUB (The 7 Steps) 139Starting my own investment club for fun and profit is easy. It does not matter Page whether I am an amateur investor just starting out, or a more experienced investor that wants to expand into more investments, there are people out there who share my interests and goals. It takes four (4) meetings in four (4) weeks, one held each week, for a serious group that wants to invest. Here are certain guidelines on starting my own investment club.STEP 1: THINKING BIG (DEVELOPING THE IDEA TO FOUND THE CLUB) ¥ Thinking About the Mission, Objective and Goal of the ClubThe mission of an investment club is to provide a program of sound investment information, networking, education, and support that helps create successful lifetime investors and financially free individuals. By becoming confident and knowledgeable investors, the members are empowered to build better financial futures for themselves and their families. A mission statement for my investment club is a simple way for me to stay focused and aware of the goals that I have set out for my investment club. I will want to write down my mission statement and make sure that each member of the investment club, and any future members, has a copy of the mission statement.The objective of the investment club is to pool money to invest in another venture to make more money. Investment clubs are a collection of like-minded people who share a common goal and objectives, making smart investment decisions that benefit the membership. Everything is shared-from research to investment choices to successes and failures. The investment club will take my money and use to make more money for me.As club members, we agree on financial strategy and mutually beneficial financial objectives that are strictly adhered to. This makes it easier to select opportunities that are right for the group. The objective of the club is to both educate and pique the interest of members with regard to investments, the world of finance, and the current events in the world around them. The club emphasizes cross-disciplinary skills such as research, report writing, and public speaking. In addition, club involvement also leads to an increasing financial awareness related to common sense saving, budgeting; long-range planning, social networking and goal setting that surely will benefit the club members in the future.The goals of an investment club are to educate members about the world of finance; give them real-life experience in trading stocks, provide opportunities to network with some of the industry professionals, and should they be interested, help them pursue careers in the financial services industry.
  • 90. Ojijo’s Investment Clubs Manual!An investment club must have the same dream. Sameness of dream creates harmony in club operations. The dream is what we want so badly, that we are willing to 139 pay any price to achieve it. It is that which lingers in our mind 24 hours a day. It is something we think about every moment. The power of a dream! Thoreau Page phrased it well; ‘dreams are the touchstone of our character’. Angelo D’Amico was in agreement when he wrote that, ‘if the dream is big enough, the facts do not count.’ Investment clubs are formed by people in the business of investment and business. The purpose of clubs is to make money, not welfare. An investment club is all about business. It is not just a hobby but an actual business venture where we will all be working together on investing our money.An Investment club is formed by people in the business of investment; people who want to make money. Investment clubs are dedicated for those who are looking for a secondary income; for those who want to get FINANCIAL FREEDOM and FINANCIAL INDEPENDENCE. ¥ Thinking About the Legal Form of the ClubOnce the mission, the objective and the goal of starting the club is clear, I should then decide whether it is going to be an association registered with an institution; a partnership or a company. Though it is possible to be the CEO of an investment club and thus sign up for a sole proprietorship, a partnership or corporation contract carries far fewer taxes and roadblocks to potential fortunes. An investment club partnership agreement is actually the safest and most sound way to go about setting up an investment club, and most clubs are put up as partnerships. • Thinking About Investment Club Constitution & Bye LawsThe investment club agreement/constitution is an integral part of every single club out there and an element I should definitely look into. More and more people are looking to invest in various financial products with their friends in a bid to secure their financial future and make their fortune. However, if I enter into any investment club or am in the process of setting one up then I should make sure that my future is well and truly secure, not to mention legally binding! This document will enshrine the bylaws and policies on rights and duties.Every club needs an investment club agreement for practical reasons as well as legal ones! In terms of the practical reasons why an agreement is necessary, the main one is because it confirms the organization of the individual club and defines the roles that people will play. Although my friends and I may well believe that nothing will go wrong, if I do not lay out the guidelines and rules in advance then I may have problems further down the road.
  • 91. Ojijo’s Investment Clubs Manual!An investment club agreement is also necessary for legal reasons. It will prevent legal action against any individual member if we follow the agreement to the 139 letter. Not only will it ensure that the interests of the individual members are protected, it will also prevent any form of illegal activity taking place. It will put a Page series of checks and balances in place to make sure that no one person is in control and that it is a democracy rather than a dictatorship. Similarly, it will prevent legal action against any individual member if they follow the agreement to the letter. Every individual should protect his or her financial future as far as possible and this is the overriding reason why an investment club agreement is essential. If I have agreed on the terms and signed the agreement then I can have peace of mind that my investments are safe and sound within the club, even if I am reliant on the stock market for financial success! Further, a bank or brokerage firm will require registration certificate or approved constitution; Articles of Incorporation; or a Partnership Agreement when setting up an account.An agreement has to do with far more than simply the agreement between two individuals. All parties need to fill out the appropriate paperwork and the necessary forms to make such a contract truly binding. The following should be observed when designing the agreement. ¯ Agreement to be based on how we want to file for taxes. ¯ Record when and how often the group will meet. ¯ List the necessary roles for operating the group such as a president to conduct meetings, secretary to keep notes, Finance Officer to deposit dues and an investor to place buy and sell orders and monitor investments. ¯ Record an initial membership contribution and ongoing dues. ¯ Determine how the club will manage payouts, divestiture or dissolution. ¯ List requirements for gaining new members once the club has started. ¯ Obtain signatures from all members on the agreement. • Thinking about Club NameI will want to come up with a name for my investment club. I do not need to make this decision on my first meeting but members should come to the next meeting ready with several ideas to share for a club name. • Thinking About Administration Structure and Club OfficersAn investment club should agree on what responsibilities there should be, and what kinds of officers and members will be needed to take on these responsibilities. After all, even regular, non-officer members have responsibilities. An investment club should have the following officers:
  • 92. Ojijo’s Investment Clubs Manual! 1. Club President 2. Deputy President & Education & Research officer 139 3. Secretary 4. Finance Officer Page 5. Social Secretary 6. The Auditor (External)STEP 2: FINDING MEMBERS FOR MY INVESTMENT CLUBAfter knowing what it is I want my club to do and what type of legal structure I want for it, then I will embark on recruiting members. This is the first step towards officially starting my investment club. Prior to my first meeting with those people interested in joining my investment club I should provide them with information about the club. This includes letting them know what the club is going to be about and how it should be run. As founder, or founders, we do have a choice as to who we invite in to the club. Discrimination laws notwithstanding, members can set out specific parameters which potential members have to meet in order to ensure the right mix.I should not be too concerned if the majority of the people who have expressed an interest in joining my club are all new to the stock market. In fact, this can be a good thing that my club is composed of people who have no real expertise in the market. People who have prior experience with the stock market may quickly become frustrated dealing with amateurs. I should not be worried about being part of a group of people that have no experience since there are many resources that are available to help someone learn about investing. The ideal membership would comprise a few analytical minds, a good accountant, an experienced captain at the helm, an IT whiz and a good administrator. An enthusiastic core membership with the ability and desire to achieve a common goal will take our club a long way.I will need to find members to join my investment club and I can achieve this in a number of ways. ¥ FriendsIf I have one or two friends who have shown a mutual interest in the stock market or bond market I can approach them to join my investing club. I should start talking with friends and see whos interested. It is best to gather a variety of people who will bring to the club a variety of interests, experiences, and perspectives. Once I find a few interested friends, I will let them invite a few of their own friends. My aim is for a club with roughly 12 to 18 members, give or take a few, but below twenty members. Too few and I may have trouble accumulating funds to invest. Too many and I will have trouble having quality discussions and finding a place to meet.
  • 93. Ojijo’s Investment Clubs Manual! ¥ Word-of-mouth 139Word-of-mouth, regarded as one of the best forms of marketing, should soon see potential members eagerly offering their resources; particularly after the word is Page out that we have managed to complete a profitable trade. ¥ AdvertisementsI can find other people who are interested in joining in my investment club by advertising in the newspaper or by posting notices on community bulletin boards. The important thing to remember is that I want to attract people who have an interest in learning more about the stock market while they invest small amounts of money.STEP 3: THE INAUGURAL CLUB MEETING (1 MEETING) STWhen the investment club meets for the first time there are several things that will need to be discussed. Usually conducted by the founder members, this meeting needs some pre-preparation. Invitations should be sent out to all prospective members giving the date, time and venue of the meeting. I will let everyone have the opportunity to add their input into the meeting so that all opinions are taken into account. The initial first meeting is a great way to clear the air and start to establish some basic guidelines for the way my investment club is going to be run and what the club goals are going to be. I will want to make sure that the majority of the members are thinking the same way. The meeting can take place at a member’s home, a quiet local pub or anywhere that offers a venue without distractions.A good inaugural meeting is one which ensures everyone knows what is going on, what the club aims to achieve, how the club will be run, which outside companies will be appointed, what responsibilities the members have, and where all officials are appointed and all members know what each officer does. Members should also know the frequency of future meetings and when and where the next one is to be held. I will also know that we have had a truly great meeting if my members leave inspired, enthusiastic and determined to do everything needed to achieve the goals. An agenda should also accompany the invitation and should include the following: • Discussion of the Vision, Dream, Mission, Objective and Goals of the ClubThe first meeting to discuss (a) whether we have enough in common, (b) how we will be organized and run, and (c) whether people are still seriously interested in forming a club. I will make sure that I schedule a large amount of time for this first meeting so that I have plenty of time to talk about all of the following issues.
  • 94. Ojijo’s Investment Clubs Manual! All of the members must have the same interest in starting an investment club. We must be on the same page about what the club is all about. I will make sure 139 that we all have similar or compatible investing goals. If some people want to double their money in two years and then get out, that is not only unrealistic, but Page also probably at odds with those who want to learn and slowly grow their savings.The discussion of common interest should be the pillar of commitment. All members should be aware of the commitment level that is required to participate in an investment club. This meeting will re-affirm that there is a seriousness to be a member of the club, and will give anyone who has second thoughts a chance to decline being a member. • Discussion and Agreement on the Club Agreement/ConstitutionThe constitution, or investment club agreement, is important for practical reasons as well as legal ones! In terms of the practical reasons, the main one is because it confirms the organization of the individual club and defines the roles that people will play. Although my friends and I may well believe that nothing will go wrong, if we do not lay out the guidelines and rules in advance then we may have problems further down the road. An investment club agreement is also necessary for legal reasons. Not only will it ensure that the interests of the individual members are protected, it will also prevent any form of illegal activity taking place. It will put a series of checks and balances in place to make sure that no one person is in control and that it is a democracy rather than a dictatorship. Similarly, it will prevent legal action against any individual member if they follow the agreement to the letter.Every individual should protect his or her financial future as far as possible and this is the overriding reason why an investment club agreement is essential. If every member has agreed on the terms and signed the agreement then I can have peace of mind that my investments are safe and sound within the club, even if I am reliant on the stock market for financial success! Further, a bank or brokerage firm will require Articles of Incorporation or a Partnership Agreement when setting up an account. o Type of Legal EntityThe meeting should discuss and agree on whether the investment club should be a partnership, a registered company or an association. The members should also agree on how we will be organized operationally. We will need to have formal agreements in place to protect ourselves in case one member turns out to be a dastardly demon. We should not neglect this paperwork issue. I will also give the
  • 95. Ojijo’s Investment Clubs Manual! basic advantages and disadvantages of each form of legal entity so as to enable quick agreement on the form of association. 139 o The Name of the Club PageThe members will decide on a name for the Investment Club. The founders should be having a tentative name that they should share, giving the reason for picking the name. The club will trade under this name and the broker and bank accounts will be under this name. The name might reflect the area we live in, the work we do etc. We can choose to be straightforward and name the club after something like our geographical region, or we can be creative.Names that some clubs have used include: The Money Makers, The Small Wonder Investment Group, Blue Chips and Salsa, The Common Bond Investment Club, Common Cents, The Fortune Seekers, The Steady Plodders, The Live and Learn Investors, The Silk Stockings Investment Club, Stocking and Bonding, Blooming Assets, Lady Investigators, The Hounds of Xemba, The Stockettes, Fortune Hunters, Dynavestors, and so on. One group of women named their club the Stroke of Luck because they all met at a doctors office tending after their husbands who had had strokes, leaving the women suddenly needing to take control of the family finances. I will want to come up with a name for my investment club. I do not need to make this decision on my first meeting but members should come to the next meeting ready with several ideas to share for a club name. € BLUE CHIP: A company that has a history of solid earnings, regular and increasing dividends, and an impeccable balance sheet. ¥ Membership  Number of MembersWe will agree on the size of the investment club. Studies show that a good size for an investment club is approximately 12 to 18 members. When I limit the size of the club to this many members I am still small enough to hold meetings in member’s homes.  Membership ListI will then make a list of member interests and expertise. This is because as I begin hunting for companies in which to invest, I will want to choose industries to study. As Peter Lynch points out, "it is a great strategy to buy what you know." (Actually, it is probably best restated as "research what you know.") If I am in the chemical business, I might volunteer to look into companies in that industry, choosing a few for a close look. If a member is an avid golfer, she might look into golf-related companies. It is a good idea to make a list of the industries with which my club members are familiar. Even if someones only hobby is hitting the
  • 96. Ojijo’s Investment Clubs Manual! malls every weekend, that is a great boon - he will be familiar with many retailers. A listing of current members, including phone numbers and 139 addresses should be done. Page  Membership DutiesEach member of an investment club is expected to participate by: £ Attending meetings £ Making monthly contribution £ Researching and following the progress of a particular stock or family of stocks that the Club has bought or is considering for purchase. £ Researching securities and presenting the data to the rest of the group. £ Making ongoing buy and sell decisions. £ Tracking and reporting overall portfolio performance. £ Accurate management and reporting of personal taxes.  Membership FeesThere should be clearly indicated the amount of money that each member should pay when they become members of the club; the monthly subscription for purchasing shares, and the monthly payment for dues for maintaining the club and club activities. Members should come to a mutual agreement upon how much money they are each going to contribute each month. This need not be set as high as possible, after all, this is a learning activity, and the members can always increase the amount at a later date. Many clubs allow members to contribute more than the monthly minimum level if they so desire. Members can make changes to the minimum amount policy at a later date. Many clubs start out with small contributions of anywhere from $25 to $50 dollars. This money is used for reimbursing club registration & other legal fees; contribution into the investment fund; buying educational materials; and purchasing snacks during the meetings. ¥ MeetingsAn investment club has several types of meetings, depending on the structure of the club. These meetings serve different purposes. As a requirement, investment clubs are filled with active participation. From researching stocks and companies to seeking out asset management software and recruiting new members to the group, they are not only a sink of money but also of time. It is important that members of the group are able to attend all meetings. Most clubs meet once a month. When there are decisions that need to be made about ongoing investments and future investments it is important that all members are part of the decision process. If the group decision is held up because some members do not attend regularly, the endeavors of the investment group are jeopardized. At a
  • 97. Ojijo’s Investment Clubs Manual! minimum, a club should have Weekly meetings; Monthly meetings; Special events meetings; and Annual club meetings. 139  Meeting Times & Place PageThe club should agree on a regular meeting time, place, length, and format. This will help us keep meetings running efficiently and prevent someones report from going on for an hour and dragging things out too long. Most meetings will probably last between one and two hours. One reason to try and keep a club size to no more than about 12-18 people is that it permits meetings to be held in living rooms. Another possibility is to seek out some other space, like a local library or church. A coffeehouse or local watering hole might also work. Perhaps a member has an available meeting room at his workplace. The club will decide when to meet, and how often.All members should agree on: 1. The days and time that they meet (most investment clubs meet once each month); 2. The place for meeting; 3. The length of the meetings (most meetings last about two to three hours); 4. The organizational format that each meeting is going to take.  Conduct of Business at MeetingsIn order to operate an investment club, business must be conducted in an orderly fashion. The level of formality will vary based on the club type. Part of the experience of starting an investment club is getting together to enjoy similar interests and goals. Club members should communicate on a regular basis. The importance of good communication between members of the group cannot be stressed enough. A typical club will have informal channels of communication via mailing lists, twitter accounts or message boards. In additional to the informal channels of communication, an investment club must set up formal channels of communication to conduct business.Typical meeting agendas include all the normal activity I would expect in an organization with elected officials as below; 1. Welcome Remarks: Welcoming of all members and visitors attending by the chairman of the meeting; this may include prayer 2. Preliminaries/Old Business: Secretary reporting on apologies; reading last meetings minutes and asking for ratification of the same; reporting on any unfinished business from the previous meeting; reporting on assignments; and reporting on all voted decisions from the previous meeting. 3. Investment Agenda: Net Asset Value (NAV) presentation by the finance secretary, indicating what each club member is worth on paper; presentation of Available Funds
  • 98. Ojijo’s Investment Clubs Manual! to invest; Voting to hold cash, sell current assets or invest in the chosen investment options, specifying an exact amount to invest and strategy to execute that investment. 139 4. Learning Agenda: Presentation of Current Research, by the members on their pre- assigned reading; presentation of research by invited guest speakers; presentation of Page lessons learnt on a previous site visit; or watching an educational audio-visual presentation. 5. Networking: Presentation on networking events engaged in during the previous week; discussion of possible networking events; or engagement in a networking event. 6. Any Other Business: Discussion of matters not indicated in the agenda, or matters for tabling in the next meeting as agenda; or other issues not directly related to education, learning or networking. This could also include options to change a brokerage house, or discussions of counter party risk. 7. Formal Close of Meeting. • Discussion of the Education & Research ProgramThere should be a listing of materials about investing that everyone should read to become more familiar with investing techniques and definitions. At the time of the next meeting members can start to discuss the finer points of investing. The vice president, who also doubles as the education officer, should be planning the first education program that the club will start learning with. The club should then also decide on an educational agenda. This will naturally change a bit over time, as members become more sophisticated investors. But it is important to start out with some kind of plan, for instance, for the first few months, to learn how to read annual reports. If we are already comfortable with that, we might delve into various valuation methods. A good way to start this discussion might be to go around the room and ask members to say what big questions they have about investing that they would like answers to. No one should be embarrassed, though - our club should foster an open and unintimidating atmosphere.Education, through member involvement in research, is a good way of encouraging enthusiasm and helping the clubs’ cause. Each member should be asked to conduct research in their spare time and report the findings at the next meeting. A good Investment Club conducts a good deal of research. Unless we have agreed to choose what equities to invest in by lining up to throw darts at broadsheet listings, we will need to research; € companies and their market sectors, € different investment vehicles open to us, € risk and return, € what portfolio would be best to achieve our overall investment strategy, € how the markets work, € how to protect against losses and maximise profitsThe list is very long and research is a continuous process.
  • 99. Ojijo’s Investment Clubs Manual!STEP 4: INVESTMENT PRINCIPLES & CLUB ADMINISTRATION (2 MEETING) ND 139 • Discussion of Investment Principles of the Club PageThe club members need to agree on the principles that will guide the investment club. There should be a mutual agreement about what investing style my club is going to focus on. Any member that is in serious disagreement about the decisions made at this meeting has a chance to decline being a member.The conveners should read through the Ojijo 9, i.e., the nine fundamental principles of investing, namely: 1. Dreaming, Thinking Big & Goal Setting: This involves painting the picture of financial freedom that I want to have, and writing what I must do to get there. 2. Budgeting: The club members and the club generally should plan all expenses and investments before any money leaves the bank account. 3. Saving: The club members, or investors, and the club, should accumulate money through savings in order to invest. 4. Long-Term Investing-The club should have a three-year plus investment outlook. 5. Portfolio Diversification-The club should diversify its portfolio so as to spread risk. 6. Dollar Cost Averaging-The club should be investing monthly, regularly. 7. Risk-Based Investment- The clubs investment decisions should be alive to the risks. 8. Knowledge-Based Investing-The club members must have a continuous learning culture 9. Compounding- The club should compound its investments and earnings. • Election/Appointment of the Club OfficersThe club should agree on what responsibilities there are, and what kinds of officers we will need to elect to take on these responsibilities. It is important to remember that even regular, non-officer members have responsibilities. The club should elect the officers in this meeting. It is important that all members of the club have the opportunity to serve in one post or another within a period of five years (usually most clubs have started achieving their financial goals after five years). This therefore means that the club leadership should rotate annually.Most investment clubs will have seven officers and a committee. The officers are Club President; Deputy President & Education & Research officer; Finance Officer; Secretary; the Auditor; IT Director; Social Secretary; and the committee is the Investment Strategy Committee.
  • 100. Ojijo’s Investment Clubs Manual! • Discussion of Tasks 139After agreeing on the club administration, in the form of the club officials, and also agreeing on the investment principles, the club should go ahead and apportion Page some of the very first duties for the new officials.The duties, with the officials to perform them, shall be as below: ℘ Banking: The proposed bank for the club. ℘ Broker: The proposed broker for the club ℘ Accounting: Availability of investment club accounting software ℘ Club Registration: The legal entity, registration process and costs. ℘ Investment Laws: Country and local by-laws about investing • Investments Clubs Strategic PlanThe Investments Club Strategic Plan is a document that clearly indicates who the investment club members are; why we come together; what we want to achieve, and how we want to achieve it, and when we will achieve it.The strategic plan clearly outlines the vision, the mission, the objectives, the goals and the activities that will be undertaken by our club to make us rich, knowledgeable and better friends.The strategic plan also has clear indicators of performance so that when we miss the goal, we know, and when we are not moving, or when we are moving in the opposite direction, we also know. The plan! The philosophers were right, if we fail to plan, we are planning to fail. A SAMPLE STRATEGIC PLAN IS HEREIN ATTACHED WITH THE BOOK.
  • 101. Ojijo’s Investment Clubs Manual!STEP 5: APPROVAL OF DOCUMENTS & BEGINNING OF RESEARCH (3 MEETING) RD 139This third meeting will discuss the various forms and documents for perusal and Page filing. • Approval of DocumentsThe following documents, information and data will be presented for approval: ℘ Banker: The proposed bank for the club. ℘ Broker: The proposed broker for the club ℘ Accounting: Availability of investment club accounting software ℘ Club Registration: The legal form, either for partnership (preferred), or company, or association. ℘ Investment Laws: Country and local by-laws about investing • Registering the Investment Club as a Business EntityAfter the above documents have been tabled and discussed, it is now time for the club to register legally. The secretary should be charged with the responsibility to reserve the name of the club, and retain services of a lawyer, to register the club. The secretary is also charged with the responsibility to contact and liaise with the finance officer to register the club tax number, and to obtain other documents such as club receipts, registration books for members, and stamp. • Obtaining Tax ID NumberThe finance officer should then file the tax information that is required to obtain a Tax ID Number. The finance officer will also now be able to open up a banking checking account for my club as well open a brokerage account. At this meeting, the members also contribute their membership registration fees, which are partly used to cover expenses of registering the club, and for buying other stationery and related items. A checking account differs from other bank accounts in that it often allows for numerous withdrawals and unlimited deposits, whereas savings accounts sometimes limit both. • First Research AssignmentAt this meeting, the members study the listed companies in the stock market, and agree to carry out analysis and research on the companies, so as to make an informed presentation at the next meeting, which shall be the first meeting to order s trade.STEP 6: THE FIRST INVESTMENT/TRADE (4 MEETING) TH
  • 102. Ojijo’s Investment Clubs Manual!At this meeting, the secretary will present to the club the official paperwork of registration, together with the bank account details and the tax number of the 139 club. When the paperwork returns, the secretary of our investment club should make sure that the paperwork is filed and that members of the club have access to Page the information. All original copies of official documentation should be kept by the secretary in a safe place. This includes any registration papers, member information, stock purchases, and any other official records that need to be safe guarded.The members will also present their research carried out after the previous week assignment, and give their analysis of the listed companies, and which stocks they should buy, any other investment, if the club is not purely for stocks.In case we are still not ready to invest, the members should present their receipts for the deposits made for investment, which deposits shall be in the bank account till the club members agree on the investment vehicle.This meeting is also attended by their stock broker for advice on the stocks to buy. Also attending this meeting should be an officer volunteer from an investments clubs association, for instance, InformedInvestors, a Regional (East Africa) Investor Education Centre, to help with any questions, and/or clarifications.After the members vote on the company to invest in, the members will then contribute their monthly dues and hand over to the finance officer for the purpose of investing.STEP 7: JOINING AN INVESTMENT CLUB ASSOCIATIONInvestment clubs remain a great way for friends and comrades alike to get together and share in the joy of investing into a capitalist system without having to risk their homes or livelihood. Once I start an investment club, however, I may begin to feel pressured to join an investment club association. An Investment Club Association is simply akin to a larger, more overreaching net that holds together a large amount of investment clubs. However, our club is in no way required to join an association like this and if we would like to retain our full independence from any outsider influence then we have every right to do so.There are, however, a several benefits to joining up with an association of investment clubs. For one, the club will receive free newsletters and trade magazines that allow investors to take advantage of certain things that may fly by unnoticed to an investment club not in the association. The club will also be given invitations to receptions and meetings for other like-minded investors and it is there that we can garner some great advice and wisdom. Further, the club gets to be introduced
  • 103. Ojijo’s Investment Clubs Manual! to various organizations for site visits, and also gets to have guest facilitators/speakers sent to them at reduced or no fee. In addition, they also pay 139 premium (reduced) fees for conferences and seminars organized by the association. Finally, they get a webpage on the association’s website which they Page can use for notices, and also accounting software, designed for investment clubs, and which they can use to carry out calculations.The InformedInvestors Program, a Regional (East Africa) Investor Education Program, is the premier, first and only biggest investment club associations in the East Africa region and beyond. This group will not necessarily take my club under its wing and turn it into a full-scale moneymaker but I can be sure that my forty dollar membership fee will help me with aforementioned tips and treats. On the other hand, the real reason many people join associations like these is because they want to feel as if they belong to something greater than simply their club.
  • 104. Ojijo’s Investment Clubs Manual! 139SAMPLE INVESTMENT CLUB DOCUMENTS PageSAMPLE INVESTMENT CLUB PARTNERSHIP AGREEMENT PARTNERSHIP AGREEMENT OF Sample Investment Club AS ADOPTED ON THE DAY OF , 20Prepared for Regional Investor Education Centre (InformedInvestors) Program by:
  • 105. Ojijo’s Investment Clubs Manual!Africa Legal Research & Consultancy-LLPALREC-UGANDA 139T 048 666 05 15| M 0701 100 059/0782 723 752A P.O. Box 4657 | Plot 110, Sekanyolya Rd. Off. Col. Muamar Gaddafi Rd. | Makerere Kivulu (Opp. PageWandegeya Flats), Kampala
  • 106. Ojijo’s Investment Clubs Manual! THIS AGREEMENT OF PARTNERSHIP made as of September, 1st, 2010 by and between the 139 undersigned Page WITNESSETH:Article 1: FORMATION OF THE PARTNERSHIPThe undersigned hereby form a General Partnership, in, and in accordance with and subject to the lawsof Uganda.Article 2: NAME OF THE PARTNERSHIPThe name of the Partnership shall be Sample Investment Club, and shall hereby be referred to as “ThePartnership”, “Club”, or “SIC”.Article 3: TERMThe Partnership shall begin on September, 1st, 2010 and shall continue for a period of five years, andthereafter from year to year unless earlier terminated as hereinafter provided.Article 4: PURPOSEThe purpose of the Partnership is to invest the assets of the Partnership in, inter alia, financialinstruments, real estate, alternative investments, forex/currency, commodities, collective investmentschemes, insurance investment instruments, and such other investment vehicles as the partners mayso agree on.Article 5: INITIAL REGISTERED OFFICE AND ADDRESSThe address of the initial registered office is Makerere University, P.O. Box, 20167, Kampala, Uganda.Article 6: MEETINGSThe partnership shall hold at least one meeting every month, at which meeting the partners shallnetwork, learn and discuss investment options and opportunities. Other periodic meetings shall be heldas determined by the Partnership.Article 7: CONTRIBUTIONSThe partners may make contributions to the Partnership on the date of each periodic meeting, in suchamounts as the Partnership shall determine. Provided, however, that no partners capital account shallexceed twenty-five percent (25%) of the capital accounts of all partners. Provided further, that thepartnership will have received a capital contribution only once the contribution has been physicallydeposited into the partnerships bank or brokerage account, and that deposit has been accepted by thebank or broker.Article 8: VALUATION:
  • 107. Ojijo’s Investment Clubs Manual!The current value of the assets and property of the Partnership, less the current value of the debts andliabilities of the Partnership, (hereinafter referred to as "value of the Partnership") shall be determined 139as of a regularly scheduled date and time ("valuation date") preceding the date of each periodicmeeting determined by the Club. PageArticle 9: CAPITAL ACCOUNTSThere shall be maintained in the name of each partner a capital account. Any increase or decrease inthe value of the Partnership on any valuation date shall be credited or debited, respectively, to eachpartners capital account in proportion to the value of each partners capital account on said date. Anyother method of valuating each partners capital account may be substituted for this method providedthat said substituted method results in exactly the same valuation as previously provided herein. Eachpartners contribution to, or withdrawal from, the Partnership shall be credited, or debited, respectively,to that partners capital account.Article 10: MANAGEMENTEach partner shall participate in the management and conduct of the affairs of the Partnership on onepartner/one vote basis regardless of his capital account.Without prejudice to the foregoing, the club shall have a Management Committee, elected by allpartners, holding the following offices on a periodic rotational basis of not more than one year. 7. Club President 8. Deputy President & Education & Research officer 9. Finance Secretary 10. General Secretary 11. The Auditor (External) 12. Social SecretaryArticle 11: SHARING OF PROFITS AND LOSSESNet profits and losses of the Partnership shall inure to, and be borne by, the partners in proportion tothe valuation adjusted credit balances in their capital accounts or in proportion to valuation unitbalances.Article 12: BOOKS OF ACCOUNTSBooks of account of the transactions of the Partnership shall be kept and at all times be available andopen to inspection and examination by any partner.Article 13: ANNUAL ACCOUNTINGEach calendar year a full and complete account of the condition of the Partnership shall be made to thepartners.Article 14: BANK ACCOUNT
  • 108. Ojijo’s Investment Clubs Manual!The Partnership shall select a bank for the purpose of opening a Partnership bank account. Fundsdeposited in said Partnership bank account shall be withdrawn by checks signed by any of three (3) 139partners designated by the Partnership. If check amount exceeds limit set in By-Laws, two signatureswill be required. PageArticle 15: BROKER ACCOUNTNone of the partners of this Partnership shall be a broker; however, the Partnership may select a brokerand enter into such agreements with the broker as required, for the purchase or sale of stocks, bonds,and securities. Stocks, bonds and securities owned by the Partnership shall be registered in thePartnership name unless another name shall be designated by the Partnership.Any corporation or transfer agent called upon to transfer any stocks, bonds and securities to or from thename of the Partnership shall be entitled to rely on instructions or assignment signed or purporting to besigned by any partner without inquiry as to the authority of the persons signing or purporting to signsuch instructions or assignments or as to the validity of any transfer to or from the name of thePartnership.At the time of transfer, the corporation or transfer agent is entitled to assume (1) that the Partnership isstill in existence and (2) that this Agreement is in full force and effect and has not been amended unlessthe corporation has received written notice to the contrary.Article 16: NO COMPENSATIONNo partner shall be compensated for services rendered to the Partnership, except reimbursement forexpenses.Article 17: ADDITIONAL PARTNERSAdditional partners may be admitted at any time, upon unanimous consent of all the partners in writingor at a meeting so long as the number of partners does not exceed 20. 1. TRANSFER TO A TRUST: A partner may, after giving written notice to the other partners, transfer his interest in the Partnership to a revocable living trust of which he/she is the grantor and sole trustee. 2. REMOVAL OF A PARTNER: Any partner may be removed by the agreement of the majority of the partners. Written notice of a meeting where removal of a partner is to be considered shall include a specific reference to this matter. The removal shall become effective upon payment of the value of the removed partners capital account, which shall be in accordance with the provisions of a withdrawal of a partner noted in paragraphs 18 and 20. The vote action shall be treated as receipt of request for withdrawal.Article 18: VOLUNTARY TERMINATIONThe Partnership may be dissolved by Agreement of the majority of the partners. Notice of said decisionto dissolve the Partnership shall be given to all the partners. The Partnership shall thereupon be
  • 109. Ojijo’s Investment Clubs Manual!terminated by the payment of all the debts and liabilities of the Partnership and the distribution of theremaining assets either in cash or in kind to the partners or their personal representatives in proportion 139to their capital valuations accounts. PageArticle 19: WITHDRAWAL OF A PARTNERAny partner may withdraw a part or all of his interest. He shall give notice in writing to the FinanceOfficer. His notice shall be deemed to be received as of the first meeting of the club at which it ispresented. If notice is received between meetings, it will be treated as received at the first followingmeeting. In making payment the valuation statement prepared for the meeting at which the notice ofwithdrawal is received will be used to determine the value of the partners account. The other partnersshall have and are given the option to purchase, in proportion to their capital accounts in thePartnership, the capital account of the withdrawing partner. If the other partners do not exercise theiroption to purchase, then the Partnership shall pay the withdrawing partner a portion or all of the value ofhis interest in the Partnership as shown by the valuation statement in accordance with paragraph 20 ofthis Partnership Agreement.Article 20: DEATH OR INCAPACITY OF A PARTNERIn the event of the death or incapacity of a partner, receipt of such notice shall be treated as a notice ofwithdrawal. Liquidation and payment of the partners account shall proceed in accordance withparagraphs 18 and 20.Article 21: PURCHASE PRICE AND TERMS OF PAYMENTIn the case of a partial withdrawal, payment may be made in cash or securities of the Partnership or amix of each at the option of the partner making the partial withdrawal. In the case of a full withdrawal,payment may be made in cash or securities or a mix of each at the option of the remaining partners. Ineither case, where securities are to be distributed, the remaining partners select the securities. Where cash is transferred, the partnership shall transfer to the partner (or other appropriate entity) withdrawing a portion or all of his interest in the partnership, an amount equal to the lesser of (i) ninety-seven percent (97%) of the value of the capital account in the partnership being withdrawn or (ii) the value of the capital account being withdrawn, less the actual cost of to the partnership of selling sufficient securities to obtain the cash to meet the withdrawal. If the sale of securities is necessary, at the next partnership meeting following the completion of such sale and payment of all associated costs, the partners shall review the details and determine which of the options (I) or (ii) pertain. A check for the appropriate amount will be issued and the check will be released to the withdrawing partner within 10 days of such review. If a partner withdrawing a portion or all of the value of his capital account desires an immediate payment in cash, the partnership at its earliest convenience may pay eighty percent (80%) of
  • 110. Ojijo’s Investment Clubs Manual! the estimated value of his capital account and settle the balance in accordance with the valuation and payment procedures set forth in paragraphs 18 and 20. 139 When securities are transferred, the partnership shall select securities to transfer equal to the Page value of the capital account or portion of the capital account being withdrawn (i.e. without reduction for brokerage commissions). Securities shall be transferred as of the date of the Clubs valuation statement prepared to determine the value of that partners capital account in the partnership. The Clubs broker shall be advised that ownership of the securities has been transferred to the partner as of the valuation date used for the withdrawal.Article 22: FORBIDDEN ACTSNo partner shall: 3. Have the right or authority to bind or obligate the Partnership to any extent whatsoever with regard to any matter outside the scope of the Partnership business. 4. Except as provided in paragraph 16.1, without the unanimous consent of all the other partners assign, transfer, pledge, mortgage or sell all or part of his interest in the Partnership to any other partner or other person whomsoever, or enter into any Agreement as the result of which any person or persons not a partner shall become interested with his in the Partnership. 5. Purchase an investment for the Partnership where less than full purchase price is paid for same. 6. Use the Partnership name, credit or property for other than Partnership purposes. 7. Do any act detrimental to the interests of the Partnership or which would make it impossible to carry on the business or affairs of the Partnership. 8. Borrow money in name of the Partnership without majority consent or mortgage or pledge Partnership assets.Article 23: RULES & REGULATIONS (ANNEXED)The partnership shall have rules and regulations for the smooth running of the business, provided thatthe same are consistent with the constitution.Article 24: PARTNERSHIP TO BE BINDING ON BENEFICIARIES OF PARTNERSThis agreement of Partnership shall be binding upon the respective heirs, executors, trustees,administrators and personal representatives of the partners.Article 24: EXECUTION & EFFECTIVE DATEThe partners have caused the Agreement of Partnership, and the Rules & Regulations herein attached,to be executed on the dates indicated below, effective as of the date indicted above.
  • 111. Ojijo’s Investment Clubs Manual! Partners: 139 (Signatures of partners) PageNAME OF PARTNER ADDRESS (PLOT/ PHONE/ EMAIL SIGNATURE 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.
  • 112. Ojijo’s Investment Clubs Manual! 139SAMPLE CLUB RULES & REGULATIONS Page RULES & REGULATIONS OF Sample Investments Club AS ADOPTED ON THE DAY OF , 20Prepared for Regional Investor Education Centre (InformedInvestors) Program by:Africa Legal Research & Consultancy-LLPALREC-UGANDAT 048 666 05 15| M 0701 100 059/0782 723 752A P.O. Box 4657 | Plot 110, Sekanyolya Rd. Off. Col. Muamar Gaddafu Rd. | Makerere Kivulu (Opp.Wandegeya Flats), Kampala
  • 113. Ojijo’s Investment Clubs Manual! 139CHAPTER I: CLUB NAME, STRUCTURE & POWERS Page Article 1: Name of the ClubPreamble &Name 1. This Club shall be called Sample Investments Club, hereafter referred to as “Club” or ‘Club’. 2. Sample Investments Club shall be a duly registered partnership with registrar of companies.Supremacy Article 2: Supremacy of the Partnership Deed The partnership deed shall be supreme law of Club and, if the provisions of the Rules & Regulations, or any other rule, order or provision is inconsistent with the Deed; the Deed shall prevail and the order, rule or provision shall be, to the extent of the inconsistency, be null and void.Objects Article 3: Objects of the Club Subject to the Partnership Deed, the following shall be the objectives of the Club: 1. To promote networking and friendship amongst members 2. To promote learning generally, and financial literacy in particular, amongst the members 3. To promote investments and income generation by members 4. To build capacity of members in personal, career and community development ¥ Proviso on objects Provided that nothing contained in Article 3 above shall preclude the Club from acting on novel and/or emerging issues and situations where these are of sufficient consequence to members’ interests or the larger public. The Club shall tackle any such issues and situations in accordance with its own genius and tradition. Provided further that such emerging issues and situations shall be reasonably incidental to the objects of the Club as aforementioned and subject only to the provisions of the Partnership Deed, and Laws of Uganda.Partnerships Article 4: Partnerships
  • 114. Ojijo’s Investment Clubs Manual! The Club may, in the pursuit of its noble objectives, co-operate with such Clubs and organisations as may be necessary for the achievement of its objects. 139 PageCHAPTER II: MEMBERSHIPFull Article 5: Persons or entities for which membership is open.Membership Full membership shall be open to all persons, irrespective of age, sex, nationality, residence or citizenship. Provided that no person qualified to be a full member shall enjoy the rights and privileges under article 6 unless and until such person has made such payments in respect of membership as may be provided for by the Managing Committee.Rights And Article 6: Rights and privileges of full membersPrivileges OfFullMembers Subject to express provisions of the Deed to the contrary, full members of the Club as laid out in Article 5 above, shall enjoy the following rights, powers and privileges; a) A member may seek election to any office or position established by the Deed and shall be entitled to vote; b) A member shall be entitled to attend, participate and vote at any Annual General Meeting (AGM) or Special General Meeting (SGM) of the Club; c) Forming part of two thirds of all the registered members, petition the Secretary- General to call the Annual General Meeting (AGM) or a Special General Meeting as the case may be;
  • 115. Ojijo’s Investment Clubs Manual! d) A member shall have the right to access all relevant information relating to affairs of the Club including books and records of accounts, audit reports and 139 minutes of meetings in so far as it shall be reasonable; Page e) A member shall have the right to take part in all the activities organized and run by the Club; f) Any member has a right to relinquish his/her membership from the Club;Resignation Article 7: Resignation Any member intending to resign from the Club shall submit his resignation in writing to the Secretary. Such shall take effect upon its reception. Provided that where a member resigns or is expelled from the Club, such a member shall not be entitled to a refund of his subscription or any part thereof or any monies, property or interests contributed by him hitherto.Disciplinary Article 8: Disciplinary Action 1) Any member may face disciplinary action if Management Committee so recommends through a motion passed by two-thirds majority of all members of Management Committee. The grounds of such an action shall be on any gross misconduct according to the code of regulations. 2) The following shall be the penalties available for such misconduct. a) Censure. b) Suspension of specific rights provided under Article 6(1) (a) to (f). c) Suspension of membership. d) Expulsion.CHAPTER III: STRUCTURE AND MANAGEMENT OF THE ORGANIZATION Article 9: Structure and management of the OrganizationComposition
  • 116. Ojijo’s Investment Clubs Manual! 1) The Club shall consist of the following organs: The Management Committee, Advisory Board, the Office of the Patron and Committees. 139 PageThe 13. The Management Committee shall consist of the Club President; DeputyManagement President & Education & Research officer; Finance Officer; Secretary; TheCommittee Auditor; IT Director and Social Secretary 2) The Management Committee shall be elected directly by members of the Club subject to the Deed.Term Of 3) The Management Committee shall, subject to the Deed, hold office for a term ofOffice one calendar year beginning from the date upon which it is sworn in.Functions 4) Subject to the Deed, the following shall be the functions of the ManagementOf The Committee;ManagementCommittee a) Management and co-ordination of all matters of the Club and may appoint such committees, as it may consider necessary to carry out specific functions. b) Appointing an Investment Strategy Committee of at least 3 members, including finance officer, to take investment decisions between meetings. c) Enter into negotiations and agreements on behalf of members. d) Take custody of all properties, documents and/or books belonging to or acquired by the Club. e) Perform any functions, play any roles and undertake any duties that are incidental to the success of the Club and the fulfillment of its objectives.Committees 5) In the performance of its functions, the Management Committee may form such committees, as it may consider necessary for the proper functioning of the Club.Vacancy 6) A Management Committee office shall fall vacant if and when; a) An office-bearer resigns from his post. The resignation shall take effect when tendered to the Secretary, or in the case of the Secretary, when tendered to the Chairperson. b) An office-bearer dies; c) An office- bearer, by reason of mental or physical infirmity, is incapable of performing the duties of the said office; d) A vote of no confidence is taken against the office bearer in question, subject to Article 23. e) An office bearer ceases to be a member of the Club; Article 10: Chairperson/President
  • 117. Ojijo’s Investment Clubs Manual!Chairperson 139 Page 1. There shall be a Chairperson who shall be the chief executive officer of the Management Committee. 2. The Chairperson shall convene the first sitting of Management Committee, subject to Article 17. 3. The Chairperson may summon Management Committee meetings and shall preside over all Management Committee meetings unless incapacitated by reason of illness or other sufficient cause. 4. The Chairperson shall confirm minutes of the Management Committee meetings. 5. The Chairperson shall, together with the Treasurer, be the official signatory to the Club bank account subject to Article 21.Secretary Article 11: General Secretary 1. There shall be a Secretary who shall be the secretary of the Management Committee and the Club. 2. The Secretary shall take minutes of all Management Committee meetings and the Club’s Annual General Meeting (AGM). Provided that minutes of the Special General Meetings (S.G.Ms) shall be taken by the Clerk of the Management Committee 3. The Secretary may summon Management Committee meetings and shall be responsible for all correspondence on behalf of the Management Committee and the Club, and may sit and [participate in decision making in all committees. 4. The Secretary shall keep all records, documents; titles ‘ejusdem generis’’ of the Club save for books of accounts and records of finance. 5. The Secretary shall communicate to all members and/or Management Committee members the venue, date and agenda of Management Committee meetings and the Annual General Meeting (A.G.M). 6. The Secretary shall keep an accurate register of members and shall make it available for inspection and for purposes of dissolution, vote of no confidence, amendment of the Deed, elections and other purposes. 7. The Secretary shall be in charge of Management Committee matters in the Management Committee.Social Article 12: Social SecretarySecretary 1. There shall be a Social Secretary who shall be the coordinator of all the activities of the Management Committee and Club and shall be in charge of logistics for all extracurricular activities thereof. 2. The Social Secretary shall deputise the Secretary and may perform such functions as may be delegated to him by the Secretary; provided that the Social Secretary shall not, on his own, issue external correspondence on behalf of the Club;The Article 13: TreasurerTreasurer 1. There shall be a Treasurer who shall be in charge of the finance committee and shall be responsible for all financial matters of the Management Committee and the
  • 118. Ojijo’s Investment Clubs Manual! Club; 2. The Treasurer shall receive and disburse all monies belonging to the Club as may 139 be authorised. 3. The Treasurer shall keep proper books and records of accounts and shall avail Page them for auditing and inspection. 4. The Treasurer shall be answerable directly to the Management Committee and club and shall therefore ensure proper prioritisation and utilisation of all monies made available to the Club. 5. The Treasurer shall attend all Management Committee and Club meetings unless prevented by sufficient reason made known to the Chairperson. Provided that no person shall be qualified to be elected as Treasurer who has been convicted of crime involving fraud or dishonesty under the laws of Uganda.CHAPTER IV: ELECTIONS Article 14: ElectionsDate Of 1) Each of the holders of the Management Committee Offices shall access office throughElections an election. 2) The general elections shall be held two weeks before the expiry of the term of office of the incumbent Management Committee. 3) No new member of the Club shall contest for elections unless he has been a member of the Club for at least five weeks. Provided that such a member shall be entitled to vote. 4) No member shall contest the posts of the Chairperson or Secretary if s/he has been a member for less than three months on the date of elections. 5) Every member shall have a single vote. The voting shall be by secret ballot simple majority system. 6) Whenever there is a tie in respect of a post, another vote shall be taken within seven days of the announcement of the tie. 7) The custody, use and investment of the funds and property of the Organization and the designation of the persons responsible thereof.By- Article 15: By-ElectionElection. Where a seat falls vacant by reason of provisions of article 8 and Article 23; a by-election shall be held within 5 weeks of the vacancy falling. PROVIDED; that where a seat falls vacant utmost three months to the next general elections a by-election shall not be held and instead;
  • 119. Ojijo’s Investment Clubs Manual! 139 a) For the posts of Chairperson and Secretary, the Vice-Chairperson and the Social Page Secretary shall hold office in an acting capacity respectively. b) With respect to other posts, Management Committee shall appoint a replacement from amongst the nominated members. Whenever a vote of no confidence is taken against the entire Management Committee, a by-election shall be held not later than 21 days after the dissolution. The Elections Appeals Tribunal established under Article 19 shall form a caretaker committee to perform the activities of the Management Committee until a new Management Committee is elected into office.CHAPTER V: MANAGEMENT COMMITTEE MEETINGS Article 16: Management Committee MeetingsManagementCommitteeMeetings The Management Committee shall hold meetings at least twice a month and at any other time as the Management Committee may deem necessary; a) The quorum for any Management Committee meeting shall be five members. b) A decision of the Management Committee meeting shall be by an open vote, simple majority and in case of a tie; the Chairperson shall the deciding vote. c) A Management Committee member, who misses three consecutive meetings without prior permission from the Secretary, shall be censured by the Management Committee and may be subjected to disciplinary action and, subject to Article 23, a vote of no confidence.Annual Article 17: Annual General MeetingsGeneralMeetings 1) The Annual General Meeting (A.G.M) shall be held on the day of swearing in of the new Management Committee. 2) Notice in writing of such meetings stating the agenda of the meeting shall be brought to all members not later than 14 days to the date of the meeting, and where practicable, the foregoing may be made by press advertisement. 3) The agenda for an A.G.M shall consist of the following; a) Confirmation of the minutes of the previous general meeting.
  • 120. Ojijo’s Investment Clubs Manual! b) Consideration of the accounts. c) Appointment of the auditor. 139 d) Such other matter as the Management Committee may decide and for which the Secretary shall give notice in writing. Page e) Any other business. 4) The quorum for any A.G.M shall be one third of the members of the Club.Special Article 18: Special General MeetingGeneralMeeting 1) Any Special General Meeting may be called to address matters which the Management Committee shall consider to be of great concern to members and which is/are urgent. 2) Notice in writing of such a meeting shall be brought to members by the Secretary.Procedure Article 19: Procedure at MeetingsAt Meetings Management Committee shall make procedures to be followed during both the Annual General Meeting and the Special general Meetings.CHAPTER VI: FINANCESFunds Article 20: Funds 1) The purpose for which the funds may be used, and in particular- (a) The prohibition of the distribution of funds and assets among members; (b) Prohibition of clauses in the Deed that may constitute loopholes for the distribution of funds and assets to the of officials except for legitimate reimbursement of expenses in carrying out the objects of the non-governmental organization; (c) Rules governing the awarding of contracts to members or officials. 2) The financial year of the Club shall correspond to the term of the Management Committee. 3) All monies and funds shall be received by and paid to the treasurer and shall be deposited by him in the name of the Club in any bank(s) approved by the
  • 121. Ojijo’s Investment Clubs Manual! Management Committee. 4) The Club may obtain funds from the following sources; 139 Page a) Membership and Subscription fees if applicable. b) Profit making and entrepreneurial activities. c) Friends and well wishers of the Club. d) Any other means approved by the Management Committee. 5) The funds of the Club may be used for the purpose of funding the objectives of the Club. 6) The signatories to the bank account shall be the Chairperson, the Finance Secretary and the General Secretary ¥ Proviso on use of funds PROVIDED, that all bank transactions shall be by approval of the Management Committee. Provided further that the signatories shall not withdraw amounts above Uganda Shillings 3,000,000 without the counter signature of the third signatory being the Social Secretary; 1) The Treasurer may keep a sum not exceeding Uganda Shillings 500,000.00 for petty disbursements of which proper accounts shall be kept. 2) Such accounts shall be open for auditing and inspection.Auditor Article 21: Auditor 1) The Club shall have an auditor appointed at a General Meeting and who shall not be a member of the Club. 2) The auditor shall serve for a single term of one year, which shall be renewable, subject to an Annual General Meeting resolution. 3) A copy of the auditor’s report on the accounts and statements shall be published at least seven days before the date of the Annual General Meeting. 4) An auditor may be paid such honorarium as maybe resolved by the Management Committee.CHAPTER VII: VOTE OF NO CONFIDENCE AND DISSOLUTION
  • 122. Ojijo’s Investment Clubs Manual! 139Vote Of No Article 22: Vote of No ConfidenceConfidence Page 1) Whenever members of the Club are dissatisfied by the performance or conduct of an officer of the Management Committee or the whole Management Committee, they shall collect names, registration numbers and signatures of at least one third of the members of every class in session where there are at least three classes in session or two thirds where only two classes are in session. 2) Such names and an annexed application shall be submitted to the Speaker petitioning him to summon a Special General Meeting or if the Annual General Meeting is ordinarily to be held within a month of the application, asking him to serve the Secretary with the application to be included in the agenda. 3) A vote shall be taken during the meeting and if at least two thirds of members vote for the application, the officer or Management Committee in respect of which the vote is taken shall vacate the office or dissolve accordingly. Provided that where seven out of the eight Management Committee members pass a resolution of no confidence in any one of the Management Committee members, Management Committee shall, by a vote supported by two thirds of its members, declare the office in respect of whose holder such a resolution has been passed vacant. Subject to Article 23 a by-election shall be held to fill the office(s) left vacant by reason of the vote.Dissolution Article 23: Dissolution The Club shall not be dissolved except by a resolution passed by an Annual General Meeting by a vote of at least three fourths of the members of the Club. PROVIDED however, that no dissolution shall come into effect without prior consent or the registrar of registrar of companies.Amendments. Article 24: Amendments The manner of amending the name, Deed or rules of the Non-Governmental Organization. 1) Whenever there is sufficient reason to amend the Deed, the member(s) seeking the amendment shall serve the Secretary with a written notice of the proposed amendment and the Secretary shall submit the same to the Chairperson. 2) The Chairperson shall thereupon table the motion in Management Committee for debate.
  • 123. Ojijo’s Investment Clubs Manual! 3) Management Committee shall pass the motion by two-thirds majority and subject the same to referendum. 139 4) The amendment shall be considered passed when voted for by two-thirds majority of the members. Page 5) The Secretary to the Management Committee shall submit a copy of the amendment to the Registrar.Code Of Article 25: Code of RegulationRegulations 1) Members of the Club shall conduct themselves in accordance with the highest standards of integrity, personal discipline and morality and shall refrain from any conduct that may bring the Club into public odium or disfavour. 2) Members shall carry themselves in all places and forums with humility and dignity. 3) A member shall not without the authority of the Management Committee make external correspondence purporting to be speaking for the Club. 4) A member shall not solicit and use funds or resources from within or without in the name of the Club without the approval of the Management Committee. 5) A member shall not use his position in the Club to unlawfully enrich himself or engage in activities or deals against the general interests of the Club 12. The manner of dissolution of the Organization and disposal of its property on dissolution.Rules & Article 26: Rules & RegulationsRegulations The club shall have rules and regulations for the smooth running of the organisation, provided that the same are consistent with the Deed.
  • 124. Ojijo’s Investment Clubs Manual!SAMPLE INVESTMENTS CLUBS STRATEGIC PLAN 139 Page INSERT CLUB LOGO HERE SAMPLE INVESTMENT CLUB STRATEGIC PLAN Contact Person: Ojijo (Chairperson/President) | M 0701/0776/0793-100059| Salim (Secretary) | M 0700-313257/0774-940115|A P.O. Box 4657 | Tel |Off Col. Muamar Ghadhafi Rd. (Opp. Wandegeya Flats)| Block 9, Kibuga Close, Kampala
  • 125. Ojijo’s Investment Clubs Manual!1.0 INTRODUCTION 1391.1 About Sample Investment Club PageThe Sample Investment Club is an association of friends/colleagues/family/clients, who have come together to network and build relationships, while also saving to invest for financial freedom, and learning through educational programs.1.2 Vision, Mission & Objectives1Club Philosophy/Motto: Financial independence is within reach.Club Vision: informed and financially free couples.Club Mission: To provide members with a sound program for investment, learning & networking.Club Objectives: 1. To provide networking programs and opportunities for members 2. To provide education programs for members for personal development 3. To provide a sound saving and investment program for members 4. To further institutional growth through strategic partnerships1.3 Club Strategic PartnersThrough this approach, the Sample Investment Club seek sto build her institutional capacity through strategic partnerships of mutual benefit and through strategic partnering with industry players to leverage strengths and achieve objectives. Our partners include  InformedInvestors-We are registered members with this regional organization promoting financial literacy and supporting investment clubs1 Kindly refer to pp.6-15 of Ojijo’s Investments Club Manual
  • 126. Ojijo’s Investment Clubs Manual!1.4 Club Administration2 139InformedInvestors is managed through various organs, with the following roles & Pageresponsibilities.Organ ResponsibilityBoard of Advisors Provides professional advisory support & networking contacts 14. Club President Maintaining vision, building networks and inspiring & empowering the team 15. Deputy President & Education & Head of education and research program and deputizes the Research officer president 16. Secretary In charge of communication with club members and between club and partners 17. Finance Officer In charge of finances, and accounting issues 18. External Auditor Audits the club finances every quarter, or annually2 Kindly refer to pp.59-74 of Ojijo’s Investments Club Manual
  • 127. Ojijo’s Investment Clubs Manual!2.0 OPERATIONAL PLAN 139 Page2.1 OBJECTIVE ONE: To Provide A Sound Saving and Investment Program for MembersGoal-s/ Activity- Resources Needed Indicators ies/Timeline M&E Framework Leader Item Unit Cost Total Cost Output Outcom (Ugx) (Ugx) eShort-TermGoal1-2 yearsMid-TermGoal3-5 yearsLong-TermGoal6-10years
  • 128. Ojijo’s Investment Clubs Manual! 139 Page
  • 129. Ojijo’s Investment Clubs Manual!2.2 OBJECTIVE TWO: To Provide Education Programs For Members for Personal 139Development PageGoal-s/ Activity- Resources Needed Indicators ies/Timeline M&E Framework Leader Item Unit Cost Total Cost Output Outcom (Ugx) (Ugx) eShort-TermGoal1-2 yearsMid-TermGoal3-5 yearsLong-TermGoal6-10years
  • 130. Ojijo’s Investment Clubs Manual!2.3 OBJECTIVE THREE: To Further Institutional Growth through Strategic 139Partnerships PageGoal-s/ Activity- Resources Needed Indicators ies/Timeline M&E Framework Leader Item Unit Cost Total Cost Output Outcom (Ugx) (Ugx) eShort-TermGoal1-2 yearsMid-TermGoal3-5 yearsLong-TermGoal6-10years
  • 131. Ojijo’s Investment Clubs Manual!2.4 OBJECTIVE FOUR: To Provide Networking Programs and Opportunities for Members 139 PageGoal-s/ Activity-ies/ Resources Needed IndicatorsTimeline Leader M&E Framework Item Unit Total Output Outcom Cost Cost e (Ugx) (Ugx)Short-Term Goal1-2 yearsMid-TermGoal3-5 yearsLong-TermGoal6-10years
  • 132. Ojijo’s Investment Clubs Manual! 139 Page
  • 133. Ojijo’s Investment Clubs Manual!FINANCIAL LITERACY & PERSONAL DEVELOPMENT BOOKS 139Reading books without applying the lessons is counterproductive to the very personal development and Page productivity improvements I strive for. Just reading does not actually change anything: the real results come from daily application of the lessons and strategies. Rather than reading more books, I will focus on applying what I have learned in the books I have already read. The Buddhists are right, ‘to know, and not to use, is not yet to know’. MAIN READING TEXTS 1. Ojijo. Ojijo’s Guide to Alternative Investments (Property/Fixed Assets, Insurance, Forex, Private Equity, Collective Investment Schemes, Collectibles & Commodities) 2. Ojijo. Making My Child Financially Intelligent: Money Lessons by Age Group (from 4-18 yrs) 3. Ojijo. How to Identify & Develop My Talent, My Profession & My Career! 4. Ojijo. Ojijo’s Guide to Financial Instruments & Financial Investment 5. Ojijo. Ojijo’s Guide to Entrepreneurship & Raising Capital 6. Ojijo. The Gift of E11even Moves to Make Me Wealthy 7. Ojijo. Ojijo’s Investment Club Manual 8. Ojijo. 99 Ways to Make People Laugh! ADDITIONAL READING TEXTS 1. Aldous Huxley. Brave New World 2. Abraham Maslow. A Theory of Human Motivation 3. Aristotle. Nicomachean Ethics 4. Adam Smith. An Inquiry Into The Nature And Causes of The Wealth of Nations 5. Angelo D’Amico. Talk the Talk 6. Alfred Marshall. Principles of Economics 7. Ben Carson. Think Big 8. Bertrand Russell. Ideas that Have Harmed Mankind 9. Benjamin Graham. The Intelligent Investor 10. Benjamin Franklin. Poor Richards Almanac 11. Buck Hedges. The Parable of The Pipeline 12. Brian Tracy. Getting Rich Your Own Way: Achieve All Your Financial Goals Faster Than You Ever Thought Possible 13. Brian Tracy. Goals 14. Booker T. Washington. Up From Slavery 15. Bob Proctor. You Were Born Rich 16. Brian Tracy. Million Dollar Habits 17. Charles Haneel. The Master Key System 18. Charles Darwin. The Origin of Species 19. Chinua Achebe. Things Fall Apart 20. C. S. Lewis. The Lion, the Witch and the Wardrobe 21. C. S. Lewis. The Chronicles of Narnia 22. Charles Dickens. Oliver Twist 23. Charles Dickens. A Tale of Two Cities 24. Confucian Canon, Analects, and The Five Classics for Confucianism 25. Confucius. The Great Learning 26. Dato Vejay Eshiwanaran. In The Sphere of Silence 27. Dan Brown. The Da Vinci Code 28. Dan Pink. A Whole New Mind: Why Right-Brainers Will Rule the Future 29. Daniel G. Amen. Magnificent Mind at any Age 30. David Schwartz. The Magic of Thinking Big 31. David Ricardo. Principles of Political Economy and Taxation
  • 134. Ojijo’s Investment Clubs Manual!32. Donald Trump. Think Like A Champion33. Dale Carnegie. How To Win Friends To Influence People 13934. David L. Feinstein. Develop Your Financial Intelligence35. David Allen. Getting Things Done (GTD) Page36. Dick Richards. Is Your Genius at Work?: 4 Key Questions to Ask Before Your Next Career Move37. David Bach. Smart Couples Finish Rich38. DH Lawrence. Lady Chatterley’s Lover39. Dante Alighieri.. The Divine Comedy40. Edward DeBono. The Six Thinking Hats41. Eckhart Tolle. The Power of Now: A Guide to Spiritual Enlightenment42. Esther Hicks. Money and the Law of Attraction43. Immanuel Kant. Critique of Pure Reason44. George S. Clason. The Richest Man in Babylon45. Garrett Hardin. Tragedy of the Commons46. George Orwell. Animal Farm47. George Orwell. 198448. Henry David Thoreau. Civil Disobedience49. Homer. The Iliad50. Homer. The Odyssey51. HH Dalai Lama and Howard C. Cutler. The Art Of Happiness52. Harry Lorayne. The Memory Book53. Henry Hazlitt. Economics in One Lesson54. Harper Lee. To Kill a Mockingbird55. Jean Jacques Rousseau. The Social Contract56. Jack Canfield. Success Principles57. John Stuart Mill. Principles of Political Economy58. John C. Maxwell. Talent Is Never Enough59. John C. Maxwell. Developing the Leader within You!60. John C. Maxwell. 21 Irrefutable Laws of Leadership61. John Maynard Keynes. General Theory of Employment, Interest and Money62. John Assaraf. The Answer: Grow Any Business, Achieve Financial Freedom, and Live an Extraordinary Life63. Joseph Heller. Catch-2264. Jim Rohn. 7 Strategies For Wealth & Happiness65. Jack Canfield. The Power of Focus: What the World’s Greatest Achievers Know about The Secret of Financial Freedom and Success66. Jared Diamond. Guns, Germs, and Steel: The Fates of Human Societies67. John C. Bogle. The Little Book Of Common Sense Investing68. James D. Watson. The Double Helix69. James Allen. As A Man Thinketh70. John Medina. Brain Rules: 12 Principles for Surviving and Thriving at Work, Home, and School71. Joseph Schumpeter. The Theory of Economic Development72. John Locke. Questions Concerning the Law of Nature73. Jack Canfield. The Success Principles: How to Get from Where You Are to Where You Want to Be74. Joe Vitale. Zero Limit75. John Milton. Paradise Lost76. J.R.R. Tolkein. Lord of the Rings77. James Arthur Ray. The Science of Success78. Judy Jones. An Incomplete Education: 3,684 Things You Should Have Learned but Probably Didnt79. Jim Rohn. The Art of Exceptional Living80. John Stuart Mill. On Liberty81. Karl Marx. Das Kapital82. Karl Marx. The Communist Manifesto83. Kahlil Gibran. The Prophet84. Kenneth Blanchard. The One Minute Manager85. Kenneth Blanchard. Leadership & The One Minute Manager
  • 135. Ojijo’s Investment Clubs Manual!86. Kouzes & Posne. The Leadership Challenge87. Les Brown. Live Your Dreams 13988. M. R. Kopmeyer. Here’s Help!89. Lao Tzu. Tao Te Ching Page90. Maslow, Abraham. Towards a Psychology of Being.91. Mario Puzo. The Godfather92. Mike Murdock. Secrets of the Richest Man Who Ever Lived93. Mark Victor Hansen. One Minute Millionaire94. Maxwell Maltz. Psychocybernetics95. Mike Litman. Conversations With Millionaires96. Michael Michalko. Cracking Creativity: The Secrets of Creative Genius97. Michael Fisher. Saving & Investing98. Maya Angelou. I Know Why the Caged Bird Sings99. Marilyn vos Savant. Brain Building in Just 12 Weeks100.Nicollo Machaivelli. The Prince101.Noah J. Goldstein. Yes!: 50 Scientifically Proven Ways to Be Persuasive102.N. Hill and W. Clement Stone. Success Through A Positive Mental Attitude103.Neil Fiore. The Now Habit104.Napoleon Hill. Law of Success 1-16105.Napoleon Hill. Napoleon Hill’s Keys to Success: The 17 Principles of Personal Achievement106.Napoleon Hill. Think & Grow Rich107.Norman Vincent Peale. The Power of Positive Thinking108.Ojijo. Stupid & Unintelligent: The Inferior Mindset of Black Leaders to Whites and the Role of the New African President!109.Ojijo. Ojijo’s Guide Book To Travel & Experience the World!110.Ojijo. Fireplace Stories: Ojijo’s Performance Poems111.Ojijo. Open Religion: My Religion is the Best Religion!112.Ojijo. Seventy-7 Moves of a Sexy Woman!113.Og Mandino. The Greatest Salesman in the World114.Patrick Kavanaugh. You Are Talented. Discovering, Perfecting & Using Your Abilities115.Peter F. Drucker. The Practice of Management,116.Plato. The Republic117.Praise George. Mastering Money118.Plutarch. Parallel Lives119.Paulo Cuelho. The Alchemist120.Ray Bradbury. Fahrenheit 451121.Robert T. Kiyosaki. Increase Your Financial IQ122.Robert T. Kiyosaki & Donald J. Trump. Why We Want You Rich123.Robert Kiyosaki. Cash Flow Quadrant124.Richard Koch. The 80/20 Principle-The Secret To Success By Achieving More With Less125.Richard A.Posner. Economic Analysis of Law126.Rhonda Byrne. The Secret127.Russell Simmons. Invest In Yourself128.Roger Fisher. Getting to YES: Negotiating Agreement Without Giving In129.Roger Lowenstein. Buffet: The Making of an American Capitalist130.Rick Warren. The Purpose Driven Life131.Robert Greene. The 48 Laws of Power132.Robert Cialdini. Influence: The Psychology of Persuasion133.Richard J. Machowicz. Unleash The Warrior Within134.Robin Sharma. Leadership Wisdom From The Monk Who Sold His Ferrari135.Robert T. Kiyosaki. Rich Dad Poor Dad: What the Rich Teach Their Kids About Money-That the Poor and the Middle Class Do Not!136.Rudyard Kipling. The Jungle Book137.Rosalie Maggio. The Art of Talking to Anyone: Essential People Skills for Success in Any Situation138.Richard A. Posner. Economic Analysis of Law. Economic Analysis of Law
  • 136. Ojijo’s Investment Clubs Manual!139.Ronald Coase. The Problem of Social Cost140.Roger Dawson. Secrets of Power Negotiating 139141.Robert Frost. The Poetry of Robert Frost: The Collected Poems, Complete and Unabridged Page142.Steven Levitt. Freakonomics143.Salman Rushdie. The Satanic Verses144.Steve Chandler. 1000 Ways to Motivate Yourself145.Sandy Botkin. Lower Your Taxes - Big Time146.Sun Tzu. The Art of War147.Samuel Smiles. Self-Help148.Stephen R Covey. Seven Habits of Highly Effective People149.Tony Robbins. Awaken the Giant Within: How to Take Immediate Control of Your Mental, Emotional, Physical and Financial Destiny!150.Theodore Bryant. Self-Discipline in 10 Days: How to Go from Thinking to Doing151.Thomas Stanley & William Danke. The Millionaire Next Door152.Thomas Malthus.R.. An Essay on the Principle of Population.153.Thomas Hobbes. Leviathan154.The Bible155.The Book of Mormon156.The Quran157.The Bhagavad-Gita158.The Kitab-i-Aqdas159.The Tanakh/Torah160.The Vedas161.The Canon of Scientology162.The Kebra Nagast and the Holy Piby163.The Satanic Bible164.Voltaire. Candide165.Walter C. Willett. Eat, Drink, and Be Healthy166.W. J. Craig. The Oxford Shakespeare. The Complete Works of William Shakespeare.167.Wallace D. Wattles. The Science of Getting Rich168.Wallace D. Wattles. The Law of Opulence169.W. Clement Stone. The Success System That Never Fails170.Zig ‘Hilary Hinton‘Ziglar. Zig Ziglars Secrets of Closing the Sale171.Zig ‘Hilary Hinton‘Ziglar. See You at the Top.172.Zig ‘Hilary Hinton‘Ziglar. Over the Top.
  • 137. Ojijo’s Investment Clubs Manual! Ojijo Investments Clubs Manual is the 139 investment clubs’ bible and tells me everything I need to know about joining, starting or running a Page successful investments club. It is an essential reference for all investment clubs - both new and established - to ensure that they are run correctly and efficiently. The vast majority of investments clubs in East Africa region swear by this guide. OjijoOjijo is a refugee exiled in Uganda since March, 2009, having fled Kenya when government agentsthreatened his life following his research and reporting on extra-judicial killings by the Kenyansecurity forces. The research, compiled when Ojijo was a volunteer researcher with Oscar Foundationfor Free Legal Aid, was submitted to Prof. Alston, the UN Special Rapporteur for Extra JudicialKillings & Forced Disappearances in February 2009, and it led to the execution of Oscar Kamau(CEO) and Oulu G.P.O (Programs Officer), on 5th March, 2009.Ojijo is a financial literacy & personal development speaker; performance poet; lawyer; researcher;trainer; social entrepreneur; network marketer; spiritualist, (Open Religion); and author diverselypublished in religion, poetry, law, history, politics, languages, financial literacy and financialinvestments, and personal development!As an entrepreneur, Ojijo invests in, and is the Founder & Principal Partner, Africa Legal Research &Consultancy, ALREC, a legal support services firm specializing in research, consultancy andtraining in Africa; Founder & Executive Chairman, BankIt (U) Ltd, a mobile savings solutioncompany; and Founder & Executive Chairman, My Wealthy Lifestyle, the first ever network marketingcompany founded by an African, dealing in personal development and highly nutritiveindigenous products.As a philanthropist, Ojijo support, and is the Founder & Team Leader of Regional Investor EducationCentre, (InformedInvestors), a regional (East Africa) company promoting financial literacy andsupporting investment clubs; Co-Founder & Director, Know Your Culture Foundation, an organizationpromoting African cultures and history; and Founder & Director, Africans Helping Africans (AHA)Initiative, a global initiative to organize Africans to help fellow Africans through traveling tovolunteer (voluntravel); promoting access to information for development (infodev) by establishingcommunity access to information centers in communities; and promoting public speaking ininstitutions (Ongea Clubs). Retail Price: UGX 10,000/ TZ. Shillings 7,500/ Kshs. 350/ USD 5 FIRST EDITION

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