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The key to implementing a successful investment club is starting with the right people from day one. In choosing your partners, you should consider whether the potential partner (1) understand your plans, the possible challenges, and can help execute toward your club goals, (2) has the talents to help your club grow, (3) is from your personal circles, such as former co-workers, college classmates, acquaintances and friends, (4) can work well with you and others on a day-to-day-basis, (5) can help translate your vision into a plan that can be carried out by you and other partners, (6) is viewed by the other partners as someone they can work with, and (7) interests in other ventures can affect your club positively or negatively. In addition, discuss specifically what each of you will do and what might happen if things go wrong.

Many clubs are established with about 5-13 members and in many cases that is a good amount. However, clubs are established for many different reasons. The right size should be determined based on your club vision, goals and the professionalism of existing partners. Your primary emphasis should be placed in choosing the right people.

The contributions should be parallel to your club goals, vision, and people. Make sure everyone is in agreement with the dollar amount and able to afford the current dues and any potential increases. In collecting the contributions there are two ways to approach this. All can contribute (1) an equal amount each month or (2) different amounts depending on each individual's choice. Many clubs starts with small, equal amounts in the range of 25-50 dollars.

With the increasing availability of information and its ease of use, the Internet is fast becoming an invaluable investing tool. However, it should be remembered that everyone is not computer literate and each club goal is not the same. Discuss with your club if you want to conduct your meetings online or face-to-face. We recommend a hybrid of the two because no medium should replace social interaction. If you decide to perform your meetings totally online put a plan in place allowing a reasonable amount of time to bring those that are not computer literate up to speed.

Many clubs hold their meetings once a month both online and face-to-face. Determine how many meetings will be held online and how many face-to-face based on the club goals and purpose. In addition, consider what phase your club is in. If you are a new club you may want to meet on a weekly basis until you have built a solid foundation. Once your club is established you may want to meet only once a month or every quarter.

Become a partnership. All your club needs to do is perform the following three steps.

1. Fill out an SS4 Form [Click here to download from the IRS site.] and contact the IRS at 1-800-829-3676 to file for an Employer Identification Number (EIN).

2. Develop your Operating Procedures and have them approved by getting everyone in your club to sign a copy. [Click here to link to an Example Operating Procedures.]

3. Contact your county clerk because some counties require that you fill out a Certificate of Co-Partnership and register your club's name. The requirements for each state are different.

Every investment club must establish an investment philosophy before starting to invest and stick to it. Any philosophy utilized should be relative to the underlying fundamentals and hidden value of the companies considered for inclusion in your organization portfolio. The portfolio should be designed around a two-tier approach (short-term and long-term). In the short-term approach, diversify into stocks that demonstrate the potential to yield on average 30% within 2.14 months. In the long-term approach, diversify into stocks that demonstrate the potential to yield on average 30% within a year.

To achieve this, our philosophy (Take A Few Trips And Become A Millionaire) use six primary components (price-to-earnings, cash position, debt factor, dividend, cash flow, profit margin, and return on equity) via our simple Stock Guide Search Tool that was developed around techniques utilized by the likes of Warren Buffet, Benjamin Graham, and Peter Lynch.

This philosophy has provided us some success and concentrates on buying the company and not the stock. It has further allowed us to be open in our approach because neither component is more important than the other. We may use the components collectively or independently.

The following could occur in our investment philosophy process.

1. If we are looking for new ideas, we may pay more attention to the Cash Position, Debt Factor, and Profit Margin components.

2. If our primary concern is dividends, we may concentrate more on the Dividends and Cash Flow components.

3. If we are concentrating on established companies (those that have been in existence five years or more), we may utilize more often the Price- to Earnings Ratio in conjunction with the other components because of the historical content.

The thing to remember on this step is to take your time.