Money clubs provide individuals with the opportunity to join together with other investors with a shared vision, investment ideas, and goals. The goal of all investors is to make a profit from their investments. In order to feel comfortable in joining an investment club, an investor must stand behind the core beliefs and investment principles of the club as a whole. To better help those that are looking into the benefits of joining an investment club, the following details two of the methods that are often used in many money clubs.

Value Investing

Value investors are looking for companies that are a bargain. By bargain, it is not meant that the stocks are simply cheap. The stocks must be cheap relative to what the company is actually worth. Value investors assume that the stock market calculations missed something. Often, qualitative measurements are what drive the belief in the market’s margin for error. For example, a company may have products out that are currently performing poorly, but they may also have an excellent employee base and wonderful leadership. They simply need to come up with better products to reach their performance potential. Value investors look at these companies as gold mines because they believe that the market has used only quantitative measurements to evaluate the company’s stock and has missed the underlying themes.

Growth Investing

Growth investors are usually interested in investing in newer companies that principally deal with emerging technologies. Growth investors to not care what the actual value of the company is at the moment nor do they concern themselves with whether they are getting the stock at a bargain. They are primarily concerned with whether the stock has the potential to continually grow and produce profits. Growth investors do not mind paying more than a stock is worth if the company they are investing in has a significant potential to make huge profits in the future. Growth investors justify overpaying by looking at the long term rewards that stand to be gained. Most growth investors are looking for a stock that can double in value within five years.

The two styles of investing, value investing and growth investing, take a different mindset to master and use a different set of factors during calculation. Overall, it is difficult to determine which strategy works better. Investors should do research to determine which makes the most sense to them and join the money club that best fits their choice.