Lessons learned in an investment club can yield significant returns in profit, education, and fun.

Up 10.8% since inception! At a recent meeting the twelve members of the New Jersey based Athena Investment Club admired their portfolio returns over a glass of wine. The etching on their glasses read, “Athena Investment Club: Check Out Our Alpha!” In the three plus years since club formation, their portfolio’s risk adjusted returns have consistently outperformed the market. Was this a group of financial professionals? Wall Street executives? MFP Global employees?

Quite the contrary. The Athena Investment Club was started by a diverse group of New Jersey women, whose goal was to invest in the markets for education, fun, and profit. Most of the women were unfamiliar with the financial markets and only had a rudimentary understanding of the global economy. As a fee only financial advisor It was my job to bring them up to speed. The club started with an initial deposit from each member of $1,000. In addition, everyone contributes another $50 monthly.

Field Trip to the New York Stock Exchange

By the time we had established the club’s risk tolerance, time horizon, and asset allocation, our money was burning holes in our pockets, and we were anxious to invest it! For each meeting, six members prepare and present stock studies of companies in an agreed sector using the National Association of Investor’s stock selection tools. Each study is an in depth report on a particular company evaluating cash flow, debt, management, and earnings. Following often animated discussions, we vote on which, if any, of the presented stocks to buy. The club has invested in foreign and domestic stocks, bonds, ETFs, and mutual funds—and has even experimented with selling options. Over the years we have had both big winners and big losers, including our biggest winner, Biogen (+69%), and our biggest loser, Excel Maritime Carriers (-52%).

The women have learned the importance of a well-diversified portfolio, how to handle volatility, and how to know when to take a loss, among other invaluable investing lessons, all while having a great time. Laura Stevens, Vice President of the club, said, “I learned I can do this! I can make informed decisions about my own investments. I feel more in charge of my own financial well-being.”

What is the most challenging part of being in the investment club? Fran Bessette, a pharmaceutical scientist, said, “Making decisions with your head and not your heart!” Club President, Tammy D’Amore, echoed this sentiment saying, “ the hardest thing is to sell a stock when things are going well and to get rid of a stock that is not performing.”

“I was surprised at how vested you become when the club picks a stock that you recommend. It makes you even more diligent when selecting your stock picks because you realize it effects the club’s overall performance and you really want a winner not a loser!” said member Carolyn Harris.

Book club getting boring? Wish you knew more about the markets? Want to take charge of your own personal finances? Get a group of friends together and start an investment club! You will be pleasantly surprised by what you learn about yourself as well as the financial markets.