Starting Your Investment Club.

We started our club with a Bogle-like mindset of minimizing operating expenditures. This mindset unintentionally led to a tiny profit in start-up costs. Here’s what we did.

(1) A How-To Book. Invest in a good book to guide you. We purchased the “Investment Club Operations Handbook” from the Better Investment Community. Cost: $26.95.

(2) Club Address. A nearby P.O. Box. Annual cost: $56.00.

(3) EIN’s/Banking Part I. We arrived at Chase bank to open a business account and were told we needed an EIN. What’s an EIN? It’s an Employee Identification Number issued by the IRS associated with your club. Every investment club is responsible for annual taxes and needs an EIN like individuals need an SSN. EIN’s are obtained free of charge through the IRS at irs.gov. Cost: Free. I called the IRS and their customer service agent was very helpful unlike those at Chase Bank...

(4) Banking Part II. We return to Chase with the EIN and were told we also needed a recognition of Partnership from the county. The Chase agent then handed us a self-contradictory page stating we only needed the EIN. I found myself irritated while Cadillac and crew more calmly found a temporary checking account giving us a $125 opening bonus. Awesome, beating the S&P already. Gain: $125.00.

(5) Partnership. The County Clerk helped us get through the correct forms properly. Cost: $10.00.

(6) Banking Part III. We used the personal account of the last visit to receive an additional referral bonus in setting up the Chase business banking account. Gain: $50.00.

(7). Business Checks. One box of duplicate business checks ordered online. Cost: $15.94.

(8) Trading Account. Scottrade seemed convenient, good for customer service, inexpensive ($7/trade), and included a referral bonus for 3 free trades. Woodcreek has an earlier post describing the various online brokers. Gain: $21.00.

In the end, the net cost of establishing the club was a gain of $87.11. --Schlitz