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How do I set up a share club?

by Angela Thompson, Digital Marketing Manager, Sharesight

Have you considered investing, but don’t know where to start? One way to get started is by starting a share club. We’ve partnered with the fixed-fee legal experts at LegalVision to put together this handy infographic on how to set up a share club in Australia:

How To Set Up A Share Club

PDF — View/download a print-quality version

Here’s a quick re-cap:

Benefits of a share club

  • It’s a fun way to learn about investing
  • It can draw together people with a wide range of skills and experience
  • You can achieve diversification on a relatively small investment
  • You can benefit from lowered costs through pooling
  • As a result of years of investing, many share clubs make a tidy profit
  • There are many social benefits (ahem, wine!)

Things to consider before you set up a share club

The easiest option is to join an existing share club but if that’s not an option you can start your own. Here are some things to consider before doing so:

  • Determine your investing goals
  • Determine how long you want to hold your investments
  • Figure out your share club size

How to set up a share club

Once you’ve sorted those items out, you’ll be ready to start formalizing your share club. But if you think you can just get a few friends together, make a few rules, and then start buying shares, think again. There are laws you need to beware of, as operating an informal club could prove problematic if there’s a dispute. You’ll need to:

  • Appoint the club roles (secretary, treasurer, etc).
  • Determine the share ownership structure, either a simple partnership or bare trust.
  • Have a lawyer draft your share club’s constitution and deed, which you’ll need to open a share trading account. LegalVision can help with this step by offering upfront, fixed-fee legal work done by their team of high-quality, experienced lawyers.
  • Seek advice to avoid common pitfalls : Learn from another share club (if possible), and use a lawyer, accountant, and possibly a financial adviser for legal and technical matters. From there, you’ll need to:
    1. Register your share club
    2. Acquire a tax file number (TFN)
    3. Open a bank and share trading account
    4. File an annual return

Running a share club

Once you share club is up-and-running, you’ll need to:

  • Manage and track your share portfolio so you know exactly how it’s performing. This is where Sharesight shines. With daily price updates, powerful performance & diversity reporting, automatic inclusion of corporate actions such as share splits and dividends, and 1-click tax reports (including Taxable Income and Capital Gains Tax) Sharesight makes share portfolio tracking and reporting a breeze. Plus, you can access it from everywhere and easily share access with everyone in the club.

  • Hold regular meetings  to review the portfolio, get reports from the secretary and treasurer, read advice from the professional adviser (if using), and determine any follow-up activity. You’ll also want to keep up-to-date records of all meetings for tax purposes.

  • Avoid breaching ASIC regulations and ensure members don’t give financial advice

  • Speak to your accountant about how to account for tax

We hope you found this content useful. While there’s a bit of work involved to get a share club started, once it’s up and running (and the portfolio is tracking along nicely in Sharesight), it can be a greatly rewarding experience on many fronts!

This information is not a recommendation nor a statement of opinion. You should consult an independent financial adviser before making any decisions with respect to your shares in relation to the information that is presented in this article.