Invest with a little help from your friends

Gisella Tomasio (source:

In the past five years, we Americans have saved between about one percent and about five percent of our disposable income, according to data from the U.S. Bureau of Economic Analysis. Europeans save closer to 15 percent.

Anyone who has tried to start exercising or stop biting her fingernails knows that it’s tough to replace a bad habit with a good one.

When trying out something new, difficult or foreign, people have more success with the help and support of friends. People get together in groups to lose weight, exercise, and give each other the extra structure they need to read books they want to read. So how about using the same strategy to work on a tough financial goal?

“Investment clubs, they are not only educational but they are fun and you can make some potential gains,” said Gisella Tomasio, a financial adviser with Ameriprise Financial in Chicago.

An investment club is similar in many ways to a book club or a fantasy sports league: A group of people get together for regular meetings and talk about something that is of common interest.

Investment club members get together on a fixed schedule, often monthly or twice a month; someone hosts and the group makes a decision about how fancy the snacks should be and how much money to contribute each month.

Take it from someone who has been in an investing group for 50 years.

RoseAnn Sippy, my boyfriend’s mom, joined her first investing group in the 1960s. The 16 women in the group each contributed $10 per month and their goal was just to learn how the markets work.

“This was sort of ‘fun money’ and there wasn’t a lot of ‘I have to make a fortune’ attitude in the group,” RoseAnn said. “This was just a chance to get together and talk about stocks.”

More than just learning about the markets, there are advantages to being in a stock club, Tomasio said: to take advantage of economies of scale and to enjoy a fun social gathering.

“If you are an investor and you want to buy stock, but you only have $100, you can’t do it,” Tomasio said, referring to minimum account sizes required by brokerages. “Every time you buy and sell, there is a commission you have to pay and obviously if you are putting in bigger chunks of money, that commission may be less than one percent instead of being five percent.”

RoseAnn’s stock group was dedicated —her first group didn’t disband until the 1980s (she has been in another one since then). But there was an advantage to her group beyond the learning and friendship:

“The nice thing about that club was that even though we only put in $10 a month, it added up,” RoseAnn said. “After a number of years, we had a considerable amount of money in there. Every time it got over $80,000, someone would say ‘we ought to pay ourselves a dividend.’”

Ready to start an investing club? Here are some resources from the Women’s Institute for Financial Education.

Tips for a new investment club

A very basic checklist for starting a club

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