There are pros and cons associated with money clubs and the following attempts to highlight the most important of both.

Pros--Money Pooling and Purpose

The group aspect of a money club can be a plus in the respect that a group of individuals pooling their money together can allow for a level of investing that would otherwise be unlikely for an individual to manage alone. The educational benefits of a money club are obvious because it is inevitable that something will be learned when a group of intelligent individuals get together and discuss a topic that they are well informed about. Often just having a group of people with which to communicate allows members to gain a sense of direction and purpose which can inspire them to research harder than they would if they were on their own.

Pros--Knowledge and Risk

The members of a money club benefit from the knowledge of other group members. It is this atmosphere of sharing and involvement that benefits investors in a group engaged in the complex game of investing where knowledge and strategy are crucial assets. By establishing a partnership with other members of an investing club, investment risk is spread out across many individuals taking the burden off one individual who wants to get into the investing world but who would otherwise not have the capital to risk in doing so.

Cons--Group Problems

The same traits that make the group structure an investment benefit could also be argued to be a disadvantage. Investors engaged with a group are less free to choose the investments that they might individually feel are the best, in favor of pleasing the group as a whole. The time that it can take for a group to make choices and decisions also limits the investing strategies that are available. For example, an investment club would be unable to utilize day trading to profit because of the quick, minute to minute decisions that must be made.

Cons--Pulling the Load

As with all groups, there will always be those members who do not do their part. The members of the investing club that sit back and ride the coattails of the more ambitious members will, in the long run, not benefit equally from any profits that are seen and will not add anything to the club in terms of investing research or group education. The only positive associated with these types of members is that they continue to provide capital with which the more ambitious can invest.