Investment Clubs & Making Your Money Grow
by Mike Cvijanovich Cawrpawr@aol.com
Greetings! Before getting started, I wanted to introduce myself - I am a pharmaceutical representative. So, you ask, why is a pill pusher writing about personal finance?

Well, the answer is fairly simple; personal finance became my hobby out of necessity. I recall an article that really struck me and still sticks in my mind to this day. The gist of the article was that in the next twenty years, Social Security will be under tremendous strain, and it was warning Baby Boomers that they would need one million dollars in cash to retire in a comfortable lifestyle. So, using my tremendous powers of scientific reasoning (I panicked then guessed) I realized that my generation (the so-called Generation X) would need two million dollars! This realization naturally begged the question, where the hell do I come up with two million bucks? I not only needed to provide a living for myself and my family, I now was faced with the task of funding my retirement without the luxury of any Social Security money.

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 As luck would have it, a friend from college was forming an investment club and wanted to get me involved. The purpose of the club was to stay in touch with friends, learn a little about the stock market, with a little luck, make some money. Thus far, the club has been a tremendous success for me in that I have learned a lot about the market. The single most important lesson I have learned is anything that sounds to good to be true.is. It seems that I am always hearing stories from friends and associates about their conquests on Wall Street. You know, a quick two thousand here, another five thousand there. Strangely enough, I never hear a word about losing money. So, I guess its that easy, everybody makes money, right? Wrong.

The reality is the stock market is nothing more than legalized gambling with our livelihoods and retirement funds as the stakes. People win big, and they also lose big every day. So where does this leave us? Do we stay out of the market? Do we play Powerball instead? Or do we call Dr. Kevorkian at age 65. Rest assured folks, there is a safe and profitable way to use the market - the mutual fund.

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 Mutual funds are a beautiful thing for the average investor because they allow the opportunity to invest in a large number of companies that we could not possibly afford to hold significant positions in. Also, because they are a conglomeration of stocks, they help to insulate the investor from daily and weekly fluctuations of individual stocks and the market as a whole. For example, if mutual fund x has holdings in 20 different stocks, and one or two of these stocks gains or loses a bundle of money, the effect is relatively slight.

So, which fund do you choose? Well that is the hard part, and I am not going to make it easy by simply telling you. I will give some advice, though, and that is to do your homework. Obviously, you should study the fund's past performance (remember, past performance is no guarantee). More importantly, (and this is something many investors fail to do) check out the fund manager. I can think of one family of funds that uses nothing but Harvard MBA's fresh out of school, and I can recall another that prides itself on having fund managers with twenty or more years of experience in the market. Obviously, comfort level is an individual choice; however, at least you will know who the manager is, their experience level, and their track record. Remember, you are entrusting him or her with the task of funding your golden years.

Until next time, good trading!

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questions? comments? ideas? contact me at joespa@caro.net