Background Over the past 20 years quite a number of us has become very involved with our sets’ activities…… Our bond which was forged by virtue of our coming together on that faithful day in 1986 has grown stronger despite all odds
Background [2/2] We all have specific expertise in our own professional fields This has created business opportunities at one time or the other for all of us We have also helped each other financially at one point or the other
My Proposal Use our varied and collective backgrounds & expertise to create a source of residual income for all Form an Investment Club where each member contributes at least N5,000 monthly into a pool dedicated towards joint investments
My Long Term Vision Evolve the club into a SEC registered cooperative bank/mutual fund open to individual and institutional investors With the knowledge we gather, spin off a company that can administer activities for other investment clubs for a fee Legal, investment, governance etc
Building an Investment Pool With 20 members contributing N10,000 per month N1.2 million in 6 months N2.4 million in 12 months N4.8 million in 12 months @ N20,000 p/m With 30 members contributing N20,000 per month N7.2 million in 12 months!!
Immediate Investment Opportunities (Year 1-2) Low Risk / Low Return Fixed Income Securities Money Market Trading Medium Risk / Medium Return F.I Securities in West African markets Investments in existing funds Investment in Bureau De Change / Currency Trading High Risk / High Return Equity Lending to Members Lending to 3 rd Parties
Investment Scenarios @ 6 Months Pool Size: N1.2 million Asset Allocation Portfolio% of HoldingsRate of Return (p.a) Low Risk40%12% Medium Risk25%22% High Risk30%80% Cash5%0%
Projected Return Average portfolio return 34% N1.2 million pool is now N1.6 million N411,600 to either share as dividend or reinvest Portfolio% of HoldingsRate of Return (p.a) Low RiskN480,000N57,600 Medium RiskN300,000N66,000 High RiskN360000N288,000 CashN60,000N0 TotalN411,600
Next Steps Formalize creation of the club Draft club charter Open bank account(s) Determine convenient meeting place Create an online meeting place (in addition to BB) for sharing documents etc. Establish committees & elect members Start investing
Committees & Immediate Responsibilities Executive Committee Investment Committee Governance & Administration Credit Draft vision & mission Select bank(s) Open accounts Draft investment strategy & policy Track pool funding by members Track portfolio returns and report Dividend and cashing out policy Draft club charter/ constitution -Joining & exit of members -Disciplinary code -Duties of committees -Guidelines for expenses and reimbursement -Template for Minutes & agenda Rules for lending to members and 3 rd parties Credit administration (or supervision of outsourced agent) Design loan application forms etc.
Risks & Mitigants Friendships will get destroyed Establish clear club rules Apathy in performing club duties and contributions Disciplinary code and exit members Default risk on lending Follow adequate credit risk mgt. guidelines
Conclusion An investment club is a business. We will all need to WORK and take on responsibilities for it to succeed Its not a get rich quick scheme The rewards can also be huge in the long run with investments in real estate, other businesses, agriculture, infrastructure, hospitality etc.