The Beardstown Ladies may have the most famous women’s investment club because of the members’ advanced ages and their folksy and prudent advice, offered in their best-selling books.
This phenomenon is becoming more popular. Instead of gathering to quilt warm bedcovers or discuss literary tomes, more women are getting together to learn about investing and in the process are making some cold cash.
The number of registered women’s investment clubs has soared in the last decade, according to the National Association of Investors Corp., a 45-year-old association in Madison Heights, Mich. The association has seen its number of female clubs swell to 40.8 percent of its 26,000 clubs nationally, or 10,608. Women’s membership has climbed to 204,000, also 40.8 percent of its total membership of 500,000. And many other women belong to clubs that aren’t registered.
But the best news is that the average investment return for the association’s clubs has exceeded the Standard & Poor’s 500 index by 3.8 percent. “In 1996, the S&P rate was 15.3 percent, and the association’s clubs’ overall rate was 19.1,” said Martha Stephens, director for corporate services and advertising. Her organization doesn’t break out results by sex.
Stephens attributed the increased interest and healthy performance to the rising stock market and women wanting to take charge of their financial destiny and having greater financial wherewithal to do so. Stephens has been a member for four years of a club that meets one night a month and has seen its portfolio inch up to $8,000.
Chicagoan Joan Baer is part of an 11-member group started three years ago that meets monthly over lunch in different members’ homes. “We eat for an hour, socialize, then do business,” she said.
With one member about to move out of town, the group decided to write a constitution. “We realized we weren’t professional about handling such exits and the possibility of a death. We decided the deceased person’s shares would go to her heirs,” Baer said.
Through a book study group on the North Shore, Gail Freed attended a single investment class. “It was fascinating, and from that a group of us decided to have the lecturer help form a club, purely for learning. But we’re doing well,” she said.
All of these clubs take a diversified investment approach. “We’ve got 11 members and 11 philosophies,” Baer said. “We’ve tried to be speculative, though we’ve found we’re more successful when we buy blue chip stocks.”
Stephens’ colleagues recently turned down someone’s suggestion to buy Microsoft because most thought its price was high, she said.
Freed’s club, whose 21 members meet once a month at one of their homes in the morning, has two members analyze five stocks for each meeting.
Some clubs bring in outside speakers to help make choices and understand the markets. Shannon Kennedy, a second vice president at the Northern Trust Co., has taught the basics of good portfolio theory, emphasizing the advantages of diversification. Kennedy, who started a club when she graduated from college to network and to pool her limited funds with friends, recently helped her mother start one.
In case you don’t have friends in a club or a daughter to help, it’s fairly easy to start one. Round up 15 to 20 friends because too few doesn’t provide enough diversity of opinion and too many won’t give you a chance to play an important role, Stephens advised.
Write bylaws that state the initiation fee ($100 is common), a minimum monthly contribution ($25 is typical), the frequency and time of the meetings, the location, the agenda, who runs the meetings and rules regarding withdrawal of funds or quitting the club.
Association membership, which costs $35 a year for a club and $14 for each member, provides clubs with a single copy of its “Official Guide to Investing,” copies to each member of its monthly magazine Better Investing, and the chance to make investments in 150 companies such as AT&T without paying a brokerage fee because of the association’s low-cost plan. For more information, call 810-583-6242.
For additional reading: “The Beardstown Ladies’ Common-Sense Investment Guide” (Hyperion, $10.95) and the group’s more recent “The Beardstown Ladies’ Stitch-In-Time Guide to Growing Your Nest Egg” (Hyperion, $19.95); Peter Lynch’s “Beating the Street” (Simon & Schuster, $12.50), and “The Investment Club Book” by John Wasik (Warner Books, $11.99).
