Learning/Education Agenda in Investment Clubs in Zambia

 

As time passes and members become more experienced and knowledgeable about investing, the club will want to increase the intensity of the club education program. There are different ways to educate investment club members to help them learn more about investing. Most investment clubs spend a fantastic deal of effort and time in study since a well-researched investment plan includes a lot higher opportunity of accomplishment.

$       Research (Library & Assigned Reading)

 “It is through research that raw opportunities can translate into investible opportunities.”-Rwoth Ramogi

While clubs are certainly interested in making a profit, investment clubs are also a great way to learn about investing. All purchases are carefully considered and well researched by the members. Even before researching individual investments, members of an investment club should familiarize themselves with different investing options and ideas on a regular basis. Club members should seek to explore new ideas and discuss investing issues. Individual members need to develop a ‘researching’ culture where each member of the club makes monthly or quarterly recommendations on new investment ideas. In one meeting, a member might present his/her findings on investing using a particular vehicle, say Treasury bills, and another meeting,  a member might report on a book about a prominent local investor.

Over time, the club might be learning other ways of valuing shares and discussing interviews published in newspapers regarding the performance of a listed company.  Another way to learn is the opportunity to bounce thoughts off others and get some additional perspectives besides learning from other seasoned investors who have expertise in areas members might be ignorant about. Ideally, the members do research and report on promising companies and on those the group has already invested in. Members also read articles about stocks, hunt down information about other companies on the Internet, and generally are willing to contribute pertinent and useful tidbits to the club.

When my investment club is just starting out, I will want to find educational material that is going to give all the members an overview of how investing works. No matter where I am in the level of education material that I am looking at, I will want to have a definite plan about what I want to learn.

The club library should contain all the presentations given to the club at the various weekly meetings or special events. These should also be uploaded on the website for all club members to download. The library materials include magazines, pod casts, videos, reading lists, etc, that aid members in making investment decisions.

The club members should also be given or they should choose an area of interest to research, or book to read, and then they get back to do a presentation to the club in the subsequent meeting. Generally, three or four people should read the same book or area for extensive analysis.

$       Guest Speakers

The investment club should regularly ask a guest speaker to the meetings to give members a firsthand experience of the investing world. Guest speakers can also discuss other relevant topics such as market trends and investment terms. This is a great way to get information for every investment club. Experienced investors can give an overview of their own investing guidelines and advice.  In the long run this can give my investment club some great new ideas of how to invest our monthly contributions. And the more ideas that we have the more investment ideas we will have. Clubs that maximize the educational aspects of their meetings usually find that profits follow.

$       Field Trips

A field trip or excursion is a journey by a group of people to a place away from their normal environment. The purpose of the trip is usually observation for education, non-experimental research or to provide club members with experiences outside their everyday activities, such as visiting the trading floor of the stock exchange, or the various regulatory offices of the stock market system, such as Capital Markets Authority. To mitigate these risks and expenses, the club should have formalized field trip procedures that consider the entire trip from estimation, approval and scheduling through planning the actual trip and post-trip activities.

€        CAPITAL MARKETS AUTHORITY (CMA): a semi autonomous body established by statute to regulate and promote the development of the capital markets industry, with the overall objectives of investor protection and market efficiency.

Investment/Earning

For the club to invest successfully, the policy of obtaining, investing and use of returns on investment must be clearly stated and followed. The following concepts should be understood by club members:

$       The Rwoth Ramogi 3 Investment Vehicles

The investment club has various options of making our money to make more money for us. These options are referred to as ‘investment vehicles,’ or ‘investment products’, which is just another way of saying ‘a way to invest.’  Each of these investments is something I purchase or place my money into in return for the earnings (capital gains, dividends or interest)  that is generated over time and paid back to me.  These vehicles are grouped according to the type of asset invested in, and Rwoth Ramogi, in his classical and all time best-seller, Making My Child Financially Intelligent: Money Lessons by Age Group (from 3-13 yrs), classifies the investment vehicles into three broad categories, namely, Personal Branding or Self-Help; Traditional Assets or Financial Instruments; and Alternative Assets or Alternative Investment Products.

In addition to other excellent books written on the subject, the club members can also read Rwoth Ramogi’s The Gift of E11even Moves to Make Me Wealthy, which teaches us the eleven areas that we need to develop to enjoy the complete and wealthy lifestyle, namely health, relationships, riches/money, career, adventure, happiness, dreams & goals, positive attitude, controlling the day, helping people and being peaceful). We can also read Talanta: Rwoth Ramogi’s Guide to Identifying, Developing & Selling My Talent & Career Skills, which has practical exercises to help us identify, develop and commercialize our talents and skills. And a practical book to read for further knowledge in investing in financial instruments and alternative investment vehicles is Invest: Rwoth Ramogi’s Guide to Financial Instruments & Alternative Investment Products.

It does not matter which method we choose as a club for investing our money, the goal is always to put our money to work so it earns us an additional profit. Even though this is a simple idea; it is the most important concept for the club members to understand.

The three vehicles as classified by Rwoth Ramogi are:

 

      1.     Personal Branding or Self-Help, which is the greatest form of investment, involves engaging in activities which enable me to identify and develop my talents and skills to realize my potential; and set goals and achieve my dreams and aspirations so as to enhance the quality of my life and contribute to my community. In addition to other excellent books written on the subject, I can also read Rwoth Ramogi’s The Gift of E11even Moves to Make Me Wealthy, which teaches me the eleven areas that I need to develop to enjoy the complete and wealthy lifestyle, namely health, relationships, riches/money, career, adventure, happiness, dreams & goals, positive attitude, controlling the day, helping people and being peaceful). I can also read Talanta: Rwoth Ramogi’s Guide to Identify, Develop and Commercialize My Talent & Career Skills, which has practical exercises to help me identify, develop and commercialize my talents and skills, through training, mentoring, coaching, consulting, instructing and or counseling.

 

      2.     Traditional Assets or Financial Instruments, also called securities, are a real (hard copy) or virtual (electronic) documents representing a legal agreement/contract involving a monetary value. They can indicate that someone owes me specific pre-agreed money amount/interest (Debt Instruments/Bonds and Bank Deposit Accounts-term and fixed deposits); or that I own part of some business process (Equity Instruments/Shares); or a cash investment, whose values are determined directly by the market (Bank Savings Accounts). Further, financial instruments can be securities whose value is determined by fluctuations in the underlying asset and are used for speculation or risk management, also refered to as derivatives. (Options, Futures, Forwards and Swaps). A practical book to read for further knowledge in investing in financial instruments is Invest: Rwoth Ramogi’s Guide to Financial Instruments & Alternative Investment Products.

 

      3.      Alternative Assets are assets other than traditional investments (stocks, bonds or cash or their derivatives). Alternative assets include Property/Fixed Assets, Insurance, Forex, Private Equity, Collective Investment Schemes, Collectibles and Commodities. A practical book to read for further knowledge on investing in alternative assets is Invest: Rwoth Ramogi’s Guide to Financial Instruments & Alternative Investment Products. In detail they are;

 

$       Collective Investment Scheme (CIS) is a pool of money from various investors for investing in various assets. It can be a professional scheme, managed by a fund manager, group, bank, or company, called Investment Company. Such professionally managed schemes can either be closed-ended (limited number of shares issued once) or open ended/mutual funds (open for new investors to buy shares). Collective Investment Schemes can also be self-managed by the members. Such are called investment clubs, which allow members to also learn and network. A practical book to read for further knowledge in forming, joining and running an investment club is Making Money Together: Rwoth Ramogi’s Investments Clubs Manual;

 

$       Property/Fixed Assets includes long-term tangible/physical assets (such as machinery, land, buildings, equipments, vehicles), or intangible/technological assets, can be a tool, technique, craft, system or method of organization in order to solve a problem or serve some purpose. Assets in software/ computer application form are called Information Technology/IT Assets (commonly referred to as software);

 

$       Collectibles are objects regarded as being of value or interest, either because they are old/antiques, or they are specially manufactured to be collectibles, including art, antiques, coins and stamps; 

 

$       Commodities are naturally occurring/raw/primary products, and are divided into three (3) categories of hard, medium and soft commodities. Soft Commodities include (plant- soya, grains, vegetables, etc & livestock- pork, beef, chicken, etc); Medium Commodities (energy- oil, gas, electricity, etc & water); and Hard Commodities (base/industrial metals- copper, aluminum, iron, etc & precious minerals- gold, silver, diamond, uranium, palladium and platinum);

 

$       Private Equity involves injecting working capital to start-up or operating private companies; and owning equity/shares for a period until returns are collected. It is done by venture capital firms, private equity funds or angel investors through leveraged buyouts, venture capital, growth capital, distressed investments and/or mezzanine capital;

 

$       Insurance Assets are insurance products that have both a protection as well as an investment component such as endowment plans (education), pension plans and annuities (retirement), investment bonds/insurance bonds and endowment plans (life insurance); and

 

$       Forex Investments involving the purchase and sale of currencies against each other. The foreign exchange market, which is usually known as ‘forex’ or ‘FX,’ is the largest financial market in the world.

It does not matter which method I choose for investing my money, the goal is always to put my money to work so it earns me an additional profit. Even though this is a simple idea; it is the most important concept for me to understand.