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In 1995 high-school teacher Sandra Brannon didn’t even know how to read statements from her stockbroker or understand most of her quarterly or annual reports. So when a woman from her Brooklyn church talked about starting an investment club. Brannon knew this was what she needed. The club, The Brownstone Group, has paid off big in terms of boosting her financial knowledge and confidence, says Brannon. She agrees with investment experts who recommend that even in times of economic uncertainty, novices can benefit from an investment club.

How the clubs work: The National Association of Investors Corp. (NAIC), the non-profit group of investment clubs and individuals, is composed of nearly 30,000 clubs, representing more than 300,000 member-investors. The average investment club has about 11 members and a portfolio worth about $63,100. The clubs work this way: Based on research they’ve gathered, a group of people pool their money and agree to invest it collectively. Some clubs require a contribution of $50 per month. NAIC estimates that clubs have earned an average 10.6 percent return on their funds, comparable to the 10.8 percent earned by Standard & Poor’s 500 annually, over the past 15 years.

Getting started: When creating a club, choose your members carefully. It’s best to have a group of people who agree to attend and participate in every meeting, pay monthly dues, and follow through with research, record keeping and other tasks. “True, the club has a quasisocial function. That’s an incentive to pull you in. But expect to do work: A successful investment club looks more like a business operation among friends than a sister circle,” says Brannon. (See NAIC’s Web site, betterinvesting.org, for detailed guidelines on setting up and managing your own club; NAIC publishes the manual Starting and Running a Profitable Investment Club.)

I have six credit cards. I have always managed to pay off any outstanding balance in full by the due date. But I’ve heard that I should check my credit report to make sure my record is clean. Why wouldn’t it be?

If you pay off your credit cards in full each month, on time and without incurring interest, you will have a good credit history. But your credit score might be improved if, instead of just credit cards, you carry other types of credit that you pay on time, like a car or other installment loan. Remember, lenders are in the business of making money, so they need proof of your ability to incur debt and repay it with interest in a regular and timely manner. So if you intend to apply for a mortgage loan to buy a house, or think you may want to borrow money to finance a business one day, make sure you have a record that shows you have made payments with interest on time.

You should order your credit report once a year from each of the three credit-reporting agencies–Equifax, TransUnion and Experian–to see if your history has been reported correctly. Typically credit reports cost up to $12.95 each. But they’re free if you have recently had a credit application turned down, or if you’re unemployed or on welfare. To order your credit reports, go to equifax.com, transunion.com and experian.com. Too many inquiries by a creditor isn’t good, but checking your own report every single year is critical. If there is incorrect information, you can dispute it immediately by calling the number on your credit report. Mistakes happen, but the worst time to find one and try to challenge it is when you’re applying for a loan.

This Financial Services article was written by Valerie Coleman Morris on 6/1/2005

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