Getting to know C-TRADE investment clubs
Investment clubs are not new, they have their roots dating back to a thousand years ago. The world’s first investment club is said to have been established in Texas in 1898 back in the days of the Wild West when few investments could be considered safe. Investment clubs were seen as an ideal way of spreading the risk away from just cattle. Today it is a concept that is widespread even on the African region.
An investment club is a group of individuals who meet for the purpose of pooling money and investing. They can be compared to mutual funds, which are investment securities that enable investors to pool their money together into one professionally managed investment. However, with investment clubs, the members of the club invest their own money and act as the management team. They are both manager and investor at the same time. You can think of an investment club as a small-scale mutual fund where decisions are made by a committee of non-professionals. Best of all, an investment club avoids the often-burdensome management fees that all mutual funds levy on their unit holders.
A typical investment club will meet on a regular basis to review its existing portfolio and to take suggestions from club members regarding new investment opportunities. The meeting is an open floor, where each club member is able to voice his or her opinion about the suitability of new investments and other concerns regarding the performance of the pooled funds. Unlike any mutual fund, the investment club is a true democracy. Here, the collective wisdom of the club members, combined with information they’ve gathered through intensive research, serves to produce the best investment decisions.
The C-TRADE Investment Clubs works in such a manner that the account creation and administration function consist of a member administration module which caters for account creation, adding participants, removing participants and a club members’ register. The administration module also facilitates the capturing of KYC documents and each member to contribute their share of funds through giving the system direct access to their personal accounts funds. When the administrator places a BUY order instruction to the Exchange, funds will be deducted from each group member’s C-TRADE account. In case of insufficient funds in a member’s account, the order in question is declined. When a match is made, the system calculates how much of a stake each person has in the club and presents it in the club menu under ‘Investment clubs shareholding details. Apportionment of funds to club members according to what they have contributed through the use of basic ratios or percentage calculations. Likewise, in the event that a group member decides to leave the group; assuming that the group has holdings in various assets, the system will calculate how much stake holding one has and as soon as they leave, the relevant assets are deducted from the group’s portfolio.
Investment clubs generally have more buying power as opposed to the case with individual investments thus more shares can be purchased at a given time which in turn increases the chance of getting quicker matches and hence, increasing investor satisfaction and in turn confidence in the whole capital market ecosystem.
To start investing on the ZSE and FINSEC listed counters on the go, simply download the C-TRADE mobile app or dial *727# across all mobile networks. Alternatively visit ctrade. co.zw to register.
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