Throughout the life of your investment club, you will have to keep a diary. Not the kind you kept as a teen, but a financial journal that tracks every single cash transaction in chronological order. This means your club will have to keep ledgers that calculate the value of each member’s shares, which constantly change as new people join and old members leave. Your club also must keep an individual record of each stock purchased and dividends received. And since there are no guarantees in life but death and taxes, your club will have to file taxes for the partnership and issue tax forms to the individuals in the club.
While this is the not-so-sexy aspect of running an investment club, new services are popping up that make club accounting a little more tolerable. Bivio.com is a Web-delivered application that enables groups of individual investors to manage their investment clubs online. The site provides such services as accounting, general administration, tax preparation, e-mail, and messaging. Information is easily shared between members who view their club’s account in a secure, private space.
Although the Brothers and Sisters Investment Club (B.A.S.I.C.) is 5 years old, the group uses Bivio in combination with its Money Central Investor Portfolio software package to prepare reporting documents. “We started using Bivio last year,” says club president Felecia Golden, a commercial development and elemental phosphorous business manager at FMC, an industrial manufacturing firm in Philadelphia. “We were trying to find a new and better way to monitor our stocks and track our account.”
The 13 members of the Tri-State club (Delaware, New Jersey, and Pennsylvania) range in age between their late 20s and early 40s. While the group comprises mostly employees from FMC and DuPont, members come from diverse educational and professional backgrounds. “Because we have been at this for a while, we are pretty organized [at managing our books], but an ongoing challenge is educating new members who have no financial background. The Website helps get people familiar with [club accounting],” says Golden.
B.A.S.I.C. has holdings in 16 companies, including Corning (NYSE: GLW), MCI Worldcom (Nasdaq: WCOM), Tellabs (Nasdaq: TLAB), Vitesse (Nasdaq: VTSs), Home Depot (NYSE: HD), Pfizer (NYSE: PFE), Merck (NYSE: MRK), and Johnson Controls (NYSE: JCI). The club’s portfolio, valued at $50,000 as of October 1, is invested 5% in small-cap stocks, 20% in midcap growth stocks, 67% in large-cap plays, and the remainder in mutual funds and cash.
Most clubs use the National Association of Investors Corp.’s club accounting software or they handle their books the old-fashioned way-manually. Both are time-consuming. “With bivio, there’s no software to install, there are no disks to share. Everything is right there on your browser,” says co-founder and CEO Ion Yadigaroglu. “The Internet allows people to communicate as a group in a format that is efficient and fun. Our site is a natural fit for investment clubs because it enables collaboration.” He is quick to point out that using the site does not replace regular club meetings but facilitates tasks associated