The concept of investment clubs is not new and has its roots dating back to a thousand of years ago. The world’s first investment club was allegedly 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.
An investment club is a group of individuals who meet for the purpose of pooling money and investing. The conventional way of managing investment clubs is that members typically meet on a periodic basis to make investment decisions. The challenges of the traditional investment clubs include lack of trust amongst group members, lack of transparency and honesty, poor record keeping systems, inadequate administration skills limited access to capital markets among others.
The C-TRADE investment clubs bridges these gaps as it is a service provided on the trading platform that pools funds of participating members online with the primary goal of enabling participants to buy shares in bulk. Participants of investment clubs have the option of depositing contributed funds into one account on the C-TRADE platform and using that same account to buy shares through the use of an administrator.
The main aim of the Investment Clubs initiative is to bring the traditional cooperative clubs to the stock market and enhances financial inclusion as they are a service provided on the trading platform that pools funds of participating members online with the primary goal of enabling participants to buy shares in bulk. Participants of Investment Clubs have the option of depositing contributed funds into one account on the C-TRADE platform and using that same account to buy shares through the use of an administrator.
C-TRADE aims to build a nest of long term sound investments through the provision of investment clubs in Zimbabwean capital markets. There is the potential that the synergy of investment clubs can translate into higher returns than one could have achieved on their own. Through trading of securities in groups, C-TRADE aims to help individuals grow their wealth and increase income at the push of a button as all this is done electronically. 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 system.
The account creation and administration consists of a member administration module which caters for account creation, adding participants, removing participants and club member register. The administration module should 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 makes a buy order, funds will be deducted from each group members’ personal account. In case of insufficient funds in one members’ account, the order in question is declined.
When a group member decides to leave the group, assuming that the group has holding 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 groups portfolio. The investment clubs supports various payment gateways that include Ecocash, Zimswitch, Telecash and Visa. When a match is made, the system calculates how much of a stake each person has in the club and present 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.