Investment Club Software

The PDSnet Investment Club software allows a group of people to invest different amounts at different times, while keeping track of the value of their individual investments.

Who should join an Investment Club?

a. Anyone can join an Investment Club provided they are over 18 years old. So any group of friends, associates, or work colleagues.

b. Literally anyone who is interested in investing in the share market, but who lacks the knowledge and experience to do it by themselves.

c. Anyone who has insufficient capital to enter the market on their own. Investments on the JSE should not be for less than R10 000 at a time because smaller investments have to pay a very high percentage of dealing costs – so if you would like to invest R200 a month or begin with a R1000 lump sum then a Investment Club will suit you perfectly.

What are the benefits of an Investment Club?

a. That you share the risks and benefits of investing on the JSE with a group of your close friends, colleagues or associates.

b. That belonging to an Investment Club will help you to learn about the share market and how to invest for yourself.

c. That you can buy or sell any number of your units at any time and there are no rules about how much you can invest or when.

d. The work of following and watching the stock market (like reading the financial press) can be shared between a number of individuals.

How can I establish my own Investment Club?

a. How do I open an Investment Club bank account and stockbroking account?

This requires you to do a little research, however we have done a lot of the leg work – please click here for more info – Get Started with Your Investment Club. After choosing which bank and stockbroker you would like to go with, it is as simple as gathering the required documents and applying for the account.

b. If I start an Investment Club, how will I find people to become members?

We recommend that you form a group with people you know well and trust. These people could be colleagues, family members or friends. A Investment Club can include as few as two members, and you can add members as you go, with each new member coming into the club at the unit price on the day they make their first deposit.

How is the unit price calculated?

The unit price of your investment club is calculated by taking the total value of the portfolio of shares owned by the club as well as all cash in the bank and stockbroking accounts, and dividing this figure by the number of units that have been issued to members. The number of units in issue is increased every time a new member joins the group and deposits money into the club bank account. This obviously increases the rand value of the club, which is matched by an increase in the number of units in issue.

Note that the unit price is calculated using the closing price of the shares in the club’s portfolio, and not the 15 minute price available in the software.

What happens to the dividends and interest received?

a. Dividends are received in your stockbroking account and are included in your cash balance. Dividends and dividends withholding tax are automatically applied to your stockbroking account and you should see this in the financial summary.

b. Interest is earned on both the cash balance of your stockbroking account as well as the cash balance in your bank account.

Transactions in the bank statements and the statements from your stockbroking account need to be manually captured into the PDSnet Investment Club software by the secretary of the club. This will update the value of the club and therefore the unit price. It is important that before any deposits are captured, that all other transactions are up to date so that the unit price is accurate on the day.

Can I sell only some of my units?

Yes, you may sell only a portion of your units.

How do I declare my investment in my Investment Club on my tax return?

By using the PDSnet Investment Club software, your group can ensure that this is all taken care of in the yearly summary which is downloadable from the software. In this summary, the various attributes of the group will be outlined and divided accordingly among members. Such attributes include capital gains (if applicable) and interest earned.

How does the watchlist work?

By using the Watchlist, your Investment Club can ensure that every member has an opportunity to contribute, and that an accurate list of interesting shares is built according to the group’s share selection criteria. Simply go to the list of stocks in the left menu of the software, search for the share you want and click to add the share on the right hand side. The watchlist can only contain a list of 30 shares. If you would like to create your own personal watchlist, you can do so in ShareFriend Pro.

Do I need ShareFriend or other charting software to participate?

No. Technical analysis software provides you with the tools you require to analyse the market and get data of all listed securities at your finger tips. You can still participate in the Investment Club without software, however it is recommended that the group make informed decisions when investing on the JSE, to minimise losses.

How can an Investment Club be terminated?

To terminate a Investment Club, the members need to sell their units, and both the bank account and stockbroking account need to be closed. The Investment Club software can remain open as a record of transactions for tax purposes, and thereafter closed by simply emailing PDSnet.

What are the different types of members?

There are types of members within a Investment Club. Executive members (or the executive committee) include the chairperson, the treasurer and the secretary. These members are elected by all members of the club, who vote the units which they hold, or commit to hold in the Investment Club once it is formed.

The fourth type of member is the normal member, whose function is to participate within the Investment Club by depositing funds when they can or want to, voting at meetings, being involved in discussions and contributing to the research for share selection.

For a complete list of roles of members, click here.

Is there a maximum number of members?

No, the Investment Club software allows for unlimited normal members, and three executive members – the chairman, treasurer and secretary.

How does one become a member?

Members are invited by an Investment Club. It is the secretary’s responsibility to get all the required documents from a new member and ensure the record for them is correct and up-to-date with contact information and other necessary details. The new member then deposits funds and receives units based on the unit price of the day.

What are the requirements for new members to join the Investment Club?

New members, including executive members, are required to give the following when joining a Investment Club:

Copy of ID document
Proof of residence
Completed membership registration form

Members are also required to sign the Investment Club constitution when joining a Investment Club to ensure they understand all the rules and guidelines.

Who appoints the executive members?

The executive members of an Investment Club are appointed by the members of the Investment Club. *Each executive member is elected by the members who vote the units which they hold, or commit to hold in the Investment Club once it is formed. Each unit is equivalent to one vote. So the more units a member owns, the more weight the vote holds.

*The PDSnet Investment Club software allows a club to choose whether they want the votes of the members weighted according to the units they own or not. Therefore, depending on what a club decides, executive members may also be voted in by members where each member is allowed one vote, no matter the units they own.

Can an ordinary member become an executive member?

An ordinary member can be appointed as an executive member if the members of the Investment Club vote for this to happen. Likewise, an executive member can be unelected by voting on the matter by members of the Investment Club.