has the potential of doubling in value over the next five years (or whatever goal your club sets). For your portfolio review, create a table for each stock holding, displaying the current price, five-year low and five-year high, and columns showing each stock’s size and industry classification.
Now give your members an annual checkup. Start with a risk assessment. At the formation of your club, members should have filled out a survey as a way to determine their risk tolerance. The purpose of these surveys is to determine the diversification and allocation of assets in your club’s investment portfolio.
Now you can create an asset allocation table and review it to guide any readjustment of the club’s portfolio. Gauge how members feel about particular types of securities. For instance, the categories of risk are safety of principal (e.g., CDs, T-bills and money-market funds); income (government bonds, utility stocks, municipal bonds and corporate bonds); growth (blue-chip stocks); and aggressive growth (speculative common stock, options and futures).
Keep in mind that members’ attitudes and ideas about investing are likely to change over time. In the beginning, club members may be conservative. But as the club’s portfolio grows, members may be more willing to consider higher-risk investments.