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Clubs are an education vehicle, not for saving
That's an interesting way to do it Roni - thanks for sharing that. I hadn't considered that approach. Gary, I completely agree with your comment as well regarding "business majors". While I do agree investment clubs are complex, given the vast amount of resources out there, including this very email list, as well as the abundance of resources online and with Bivio, I think it's overstating it a bit to suggest only business majors are able to participate in investment clubs. Bivio has provided an excellent program and resources to make running an investment club very easy and accessible to many people.

I do still wonder about the 20% limit imposed by many clubs but I have seen several comments that have at least caused me to considered the reasons why other clubs may have those limits.

Thanks everyone for all your input - as always, I learn something every time I read these emails.

Andy



On Wed, Jan 11, 2017 at 2:26 PM Roni Schalman <roni.schalman@gmail.com> wrote:
When a member reaches 20% in our club, they stop paying monthly dues -
they remain active, voting members - and restart monthly dues when
they fall below 20%. It encourages us to bring in new members and have
current members increase their monthly dues when this happens to help
distribute member ownership more evenly. We do not want members who
reach 20% to withdraw any funds as that impacts all members and our
portfolio.

On Wed, Jan 11, 2017 at 12:04 PM, Roy Chastain <roy12@me.com> wrote:
> We had the same question in one of my clubs and came up with the same reason
> as Margaret stated ("equal voting" clubs). But we came up with a reason to
> not enforce it. For no reason other than we had two partners bypass the 20%
> on due to longevity, withdrawal of a portion would require them to take the
> money and pay taxes earlier than they had planned. Because of the latter,
> we voted to suspend that provision (and later voted to delete it). Weigh
> what is important to the entire club, as both views seem valid to me.
>
> Thank you,
> Roy Chastain
> "The single biggest problem in communication is the illusion that it has
> taken place." George Bernard Shaw
>
>
>
>
> On Jan 11, 2017, at 8:51 AM, Margaret Wentworth <pegwentworth@gmail.com>
> wrote:
>
> This 20% maximum was suggested by NAIC in sample bylaws. We do have one vote
> per member regardless of percent ownership. One thought is that a longtime
> member could have a large enough share that their total withdrawal would be
> a big blow and cause a major disruption.
> We are actually discussing bylaws at tonight's meeting. Will bring up this
> point in discussions. Plan to share some comments on paying out deceased
> members.
>
> On Wednesday, January 11, 2017, Andy Butler <abutler911@gmail.com> wrote:
>>
>> Unless you have a voting mechanism that allows members more votes based on
>> percentage owned, what is the reasoning behind the 20% cap? We don't have
>> this provision in our club because every member has exactly one vote
>> regardless of percentage owned. Just curious.
>>
>> Andy
>>
>>
>>
>> On Wed, Jan 11, 2017 at 9:41 AM Eric Swift <swift.eric@gmail.com> wrote:
>>>
>>> We do have in out partnership agreement that if one member has more than
>>> a certain percentage of the total assets the shoud reduce their holdings.
>>> This may help.
>>>
>>> On Jan 11, 2017 11:02 AM, "Scott Freeman" <scottbefreeman@gmail.com>
>>> wrote:
>>>>
>>>> Well the exact comment from Lynn M. Ostrem
>>>> (garbagecop@gmail.com) was:
>>>> For 2 decades, I've preached that clubs are an education
>>>> vehicle, not a retirement savings account. It's meant to be
>>>> a place to learn how to invest for your future. But when
>>>> member accounts grow to the point where people feed the need
>>>> to "protect" them, I think it's time to take a distribution.
>>>>
>>>> Maybe Lynn will see the post and clarify.
>>>> Scott
>>
>> --
>>
>> Andy
>
>
--

Andy

Instead of a fixed percentage ownership limit, our club has a rule that says no member may own more than double what anyone else owns. So even if we got down to less than 5 equal members it can still work out. Here is the language.

"However no partner may own more than 2.0 times the percentage of the club that he/she represents to the number of members. For instance, in a club of 10 members, no member may own more than 20% (2 x 1/10 =.20 or 20%) of the capital accounts of all the partners." 

Best,
 Dave Nathanson
 Hawaiian Shirt Society

On Jan 11, 2017, at 2:06 PM, Andy Butler <abutler911@gmail.com> wrote:

That's an interesting way to do it Roni - thanks for sharing that. I hadn't considered that approach. Gary, I completely agree with your comment as well regarding "business majors". While I do agree investment clubs are complex, given the vast amount of resources out there, including this very email list, as well as the abundance of resources online and with Bivio, I think it's overstating it a bit to suggest only business majors are able to participate in investment clubs. Bivio has provided an excellent program and resources to make running an investment club very easy and accessible to many people. 

I do still wonder about the 20% limit imposed by many clubs but I have seen several comments that have at least caused me to considered the reasons why other clubs may have those limits. 

Thanks everyone for all your input - as always, I learn something every time I read these emails. 

Andy



On Wed, Jan 11, 2017 at 2:26 PM Roni Schalman <roni.schalman@gmail.com> wrote:
When a member reaches 20% in our club, they stop paying monthly dues -
they remain active, voting members - and restart monthly dues when
they fall below 20%. It encourages us to bring in new members and have
current members increase their monthly dues when this happens to help
distribute member ownership more evenly. We do not want members who
reach 20% to withdraw any funds as that impacts all members and our
portfolio.

On Wed, Jan 11, 2017 at 12:04 PM, Roy Chastain <roy12@me.com> wrote:
> We had the same question in one of my clubs and came up with the same reason
> as Margaret stated ("equal voting" clubs).   But we came up with a reason to
> not enforce it.  For no reason other than we had two partners bypass the 20%
> on due to longevity, withdrawal of a portion would require them to take the
> money and pay taxes earlier than they had planned.  Because of the latter,
> we voted to suspend that provision (and later voted to delete it).  Weigh
> what is important to the entire club, as both views seem valid to me.
>
> Thank you,
> Roy Chastain
> "The single biggest problem in communication is the illusion that it has
> taken place."  George Bernard Shaw
>
>
>
>
> On Jan 11, 2017, at 8:51 AM, Margaret Wentworth <pegwentworth@gmail.com>
> wrote:
>
> This 20% maximum was suggested by NAIC in sample bylaws. We do have one vote
> per member regardless of percent ownership. One thought is that a longtime
> member could have a large enough share that their total withdrawal would be
> a big blow and cause a major disruption.
> We are actually discussing bylaws at tonight's meeting. Will bring up this
> point in discussions. Plan to share some comments on paying out deceased
> members.
>
> On Wednesday, January 11, 2017, Andy Butler <abutler911@gmail.com> wrote:
>>
>> Unless you have a voting mechanism that allows members more votes based on
>> percentage owned, what is the reasoning behind the 20% cap? We don't have
>> this provision in our club because every member has exactly one vote
>> regardless of percentage owned. Just curious.
>>
>> Andy
>>
>>
>>
>> On Wed, Jan 11, 2017 at 9:41 AM Eric Swift <swift.eric@gmail.com> wrote:
>>>
>>> We do have in out partnership agreement that if one member has more than
>>> a certain percentage of the total assets the shoud reduce their holdings.
>>> This may help.
>>>
>>> On Jan 11, 2017 11:02 AM, "Scott Freeman" <scottbefreeman@gmail.com>
>>> wrote:
>>>>
>>>> Well the exact comment from Lynn M. Ostrem
>>>> (garbagecop@gmail.com) was:
>>>> For 2 decades, I've preached that clubs are an education
>>>> vehicle, not a retirement savings account.  It's meant to be
>>>> a place to learn how to invest for your future.  But when
>>>> member accounts grow to the point where people feed the need
>>>> to "protect" them, I think it's time to take a distribution.
>>>>
>>>> Maybe Lynn will see the post and clarify.
>>>> Scott
>>
>> --
>>
>> Andy
>
>
-- 
Hi Gary,

I can understand and appreciate your frustration and venting. I am a CPA by training but since I manage the benefit plans, I'm in HR. When I first moved to HR from finance I thought HR people were arrogant about how they decided on how I live my life, and did not care costs or any issues a CPA would address. I found I beyond residing in a different department, I spoke a different language and that difference alone was painful. But I found that for the most part, what I thought were insensitive or outrageous comments turned out to be innocent when I stepped in their shoes.

I will apologize for any friction you have felt, and for any I have given in the past. I'm sure I've had my share of comments that were less than civil. Just remember this is social media where anyone that believes they are a star, or a bully, or a shrinking violet can be just that, and stay safely away from the face to face confrontation that most would never engage. This is a very sharing community, sometimes to excess, and we need to filter each comment as they appear.

Mark Eckman

On Wed, Jan 11, 2017 at 1:22 PM, Gary Hoffmann <hoffmanns1985@hotmail.com> wrote:

I'm really sorry, as I said I was not going to use or recommend using this vehicle for club advice, but I too have watched the responses generated by my original question.



I have a Q (Question),

To teach in a club what do you need?

Thank you.
Vp


On Wed, Jan 11, 2017 at 5:23 PM, Mark Eckman <mark2459@gmail.com> wrote:
Hi Gary,

I can understand and appreciate your frustration and venting. I am a CPA by training but since I manage the benefit plans, I'm in HR. When I first moved to HR from finance I thought HR people were arrogant about how they decided on how I live my life, and did not care costs or any issues a CPA would address. I found I beyond residing in a different department, I spoke a different language and that difference alone was painful. But I found that for the most part, what I thought were insensitive or outrageous comments turned out to be innocent when I stepped in their shoes.

I will apologize for any friction you have felt, and for any I have given in the past. I'm sure I've had my share of comments that were less than civil. Just remember this is social media where anyone that believes they are a star, or a bully, or a shrinking violet can be just that, and stay safely away from the face to face confrontation that most would never engage. This is a very sharing community, sometimes to excess, and we need to filter each comment as they appear.

Mark Eckman

On Wed, Jan 11, 2017 at 1:22 PM, Gary Hoffmann <hoffmanns1985@hotmail.com> wrote:

I'm really sorry, as I said I was not going to use or recommend using this vehicle for club advice, but I too have watched the responses generated by my original question.




As a club treasurer, if I were faced with such a request from the widow of a deceased member, I would simply ask that she pay for a consultation with a reputable attorney. I would present the attorney's advice to the membership and, as a club, we would decide how to proceed so as to avoid exposing members to subsequent legal problems.  



From: Lynn Ostrem <garbagecop@gmail.com>
To: The Club Cafe <club_cafe@bivio.com>
Sent: Wednesday, January 11, 2017 10:13 AM
Subject: Re: [club_cafe] Clubs are an education vehicle, not for saving

Yes, I'm watching and reading and would be happy to respond.

In context, we were discussing the death of a member and what to do with the money. People have brought up trusts and beneficiaries and, in past discussions, we've heard about lots of different ways to circumvent and/or delay the inevitable.

What I wanted to convey was that most people who set up an investment club are not aware it can be very complex.  Too complex for most of us who are not business majors.  For THAT reason, we need to keep things as simple as possible at the club level.

I was an NAIC chapter director at one time. I worked with clubs issues for many years, and I saw kind-hearted members try to do things that accommodated one or two members, rather than making the best interest of ALL members the priority.  In the original post, Gary's club wanted to help this poor lady who lost her husband.  If his club account was the only item to go into probate, it would no doubt complicate her life, and possibly hold up her financial support.  Sad as that may be, it simply cannot become the club's problem due to the complexity of death taxes.

The NAIC founders always said the #1 reason for the club was "to pool our time and talent to learn to invest in good quality growth stocks." And these guys had a million dollar club!  So, my point was, if you look at the situation Gary's club is facing, and you consider how you would want it handled if it were your spouse, you might not want to use the investment club as your retirement account.  Especially if it could adversely affect your loved ones due to probate issues.  That's all I meant.

I firmly believe that the club is an education vehicle. I faithfully pay my dues and contribute to the benefit of the club by continuing to learn and share.  But if I have any extra $50 or $100, I'm going to put that money into my personal retirement account and use the education I've learned to grow my own nest egg.  And that's what I've taught my club members to do.  Our beloved Ellis Traub used to say it wasn't the amount of money in the club account.  It was how well you invested what you had. You may not agree, but I know many do.

I have seen young, inexperienced kids start clubs with $10 or $20 per month and make the club their only savings vehicle while they are learning. That's great!  But I've also seen adults make their club account their only savings vehicle and let everyone else in the club grow it for them. 

I'm only saying, if you accumulate enough money in your club account that you are worried about trusts and beneficiaries, consider moving some of it to a personal account and continue to invest alongside the club. Or, speak to an estate attorney to find out how to classify your partnership. Just don't put the onus on the club,

I hope that clarifies.

Lynn O.



Lynn M. Ostrem
Resource Management Group, Inc.
171 Rickard Road
Minneapolis, Minnesota 55432
Office: 763/497-5153
Cell: 612/750-4943
garbagecop@gmail.com


On Wed, Jan 11, 2017 at 10:25 AM, Margaret Wentworth <pegwentworth@gmail.com> wrote:
Interesting discussion. We have asked members to take a small distribution once since 1998 when their share approached 20%. Ourbylaws prohibit any one member from owning more than that amount. See real members have taken partial withdrawals for unexpected expensive reasons like health care costs. Otherwise we invest in growth stocks and have some sort of education segment like reading a book together or going to seminars. Education is key, but nothing is more fun than making 800% getting in on a winner at the start of its run!

Peg Wentworth, Women's Investment Network


On Wednesday, January 11, 2017, Scott Freeman <scottbefreeman@gmail.com> wrote:
Well the exact comment from Lynn M. Ostrem
(garbagecop@gmail.com) was:
For 2 decades, I've preached that clubs are an education
vehicle, not a retirement savings account.  It's meant to be
a place to learn how to invest for your future.  But when
member accounts grow to the point where people feed the need
to "protect" them, I think it's time to take a distribution.

Maybe Lynn will see the post and clarify.
Scott



Vp, Can you expand on your question?
My simple answer (not meaning to sound snarky or sarcastic) is that one needs the knowledge and the willingness to share it with others.

On January 11, 2017 at 6:49 PM GRTClub <grtrend@gmail.com> wrote:

I have a Q (Question),

To teach in a club what do you need?

Thank you.
Vp


On Wed, Jan 11, 2017 at 5:23 PM, Mark Eckman <mark2459@gmail.com> wrote:
Hi Gary,

I can understand and appreciate your frustration and venting.  I am a CPA by training but since I manage the benefit plans, I'm in HR.  When I first moved to HR from finance I thought HR people were arrogant about how they decided on how I live my life, and did not care costs or any issues a CPA would address. I found I beyond residing in a different department, I spoke a different language and that difference alone was painful.  But I found that for the most part, what I thought were insensitive or outrageous comments turned out to be innocent when I stepped in their shoes. 

I will apologize for any friction you have felt, and for any I have given in the past.  I'm sure I've had my share of comments that were less than civil.  Just remember this is social media where anyone that believes they are a star, or a bully, or a shrinking violet can be just that, and stay safely away from the face to face confrontation that most would never engage.  This is a very sharing community, sometimes to excess, and we need to filter each comment as they appear.

Mark Eckman

On Wed, Jan 11, 2017 at 1:22 PM, Gary Hoffmann <hoffmanns1985@hotmail.com> wrote:

I'm really sorry, as I said I was not going to use or recommend using this vehicle for club advice, but I too have watched the responses generated by my original question.





 
I think that it's important to have a agreed upon goal throughout the group. For mine, we are determined to be millionaires! That means that we incorporate not only learning about investing, but money management, budgeting, debt removal, retirement, insurance, emergency funds.. all of that. We attempt to provide unlimited educational opportunities and speakers. For us to withdraw without an emergent cause is to disband from the group. We are in it for the long haul!

On Jan 11, 2017 9:25 AM, "Scott Freeman" <scottbefreeman@gmail.com> wrote:
In another thread,
(http://www.bivio.com/club_)
relating on how to handle the death of a partner, a comment
was made suggesting that club's should only hold enough
assets to learn rather than actually save. The club I'm in
was formed in 1990 and quite frankly we never leave the room
with cash on the table. We've been invested only in growth
stocks for more than 25 years. It's been a fruitful learning
experience but also profitable.

I'm wondering if others in clubs with longer histories
encourage partners to withdraw assets and discourage
partners from using the club as a savings vehicle?