Ok, We are a brand new club and do not even have our
brokerage account open. We are thinking of opening our
account at E*Trade because a couple of the members have had
good experiences with them and we believe they will survive.
E*Trade has a minimum opening deposit of $1000 for IC
accounts but we will not have that much until about month 3.

Here's the question. Should I (I'm the Treasurer) just
stuff the monthly contributions into an envelope until we
have the $1000, then deposit the money with E*Trade, then
enter member payments into that brokerage account
accordingly?

Or... Should I open a checking/savings account in the world
and in bivio.com, deposit the money as it comes in and post
payments to this account, then xfer the money to E*T?

In case you can't tell - I'm not an accountant I just drew
the short straw...

Thanks - D

D writes:
> Here's the question. Should I (I'm the Treasurer) just
> stuff the monthly contributions into an envelope until we
> have the $1000, then deposit the money with E*Trade, then
> enter member payments into that brokerage account
> accordingly?

I disagree with Ira. Don't open a bank account. Just wait till you
have enough money to open the account.

Here's my logic. Let's work on the assumption that investing is a
good thing, and that your members are fired up to start a club.
Therefore, they should want to put in as soon as possible so that they
can take advantage of the club's collective knowledge, and see what is
really going to happen. If some member wants to top off the funds to
make it $1000, great! If they can't, wait to write the check. Do
your research, and get excited about the stocks you are about to
invest in.

Make sure you write your partnership agreement so that anybody can
invest any amount at any time. Once the minimum deposit is met, give
the members deposit slips and let them send the checks in directly to
E*Trade. This is exactly how my first club operated with E*Trade.
Some of us set up regular ACH transfers, since this was cheaper,
easier, and got us some free trades.

Of course, you'll want to use bivio's Penny Payment system. It's the
easiest way to manage member payments. It's explained in The One
Minute Treasurer(tm) guide:

http://www.bivio.com/club_cafe/files/TheOneMinuteTreasurer.pdf

> In case you can't tell - I'm not an accountant I just drew
> the short straw...

I can tell. Accountants like to make things more complicated than
they need to be. The "stuffing it in an envelope" idea is very much
in line with our thinking at bivio. :-)

If you follow our One Minute Treasurer recommendations, you won't need
to be an accountant, or even someone familiar with accounting. Our
recommendations are by far the easiest way to run an investment club!

Cheers,
Rob

Rob Nagler writes:
> Make sure you write your partnership agreement so that anybody can
> invest any amount at any time. Once the minimum deposit is met, give
> the members deposit slips and let them send the checks in directly to
> E*Trade. This is exactly how my first club operated with E*Trade.

Jim Thomas informed me that E*Trade lumps deposits for his club, which
makes our penny payment system not useful. This wasn't the case for
my club, because we mailed or ACHed our deposits separately. I
strongly recommend you vote to have your members mail their deposits
directly, anyway, as it eliminates the middleman (treasurer), and
makes people more directly responsible for tracking their
investments.

E*Trade is the only broker I know which lumps deposits. Clubs may
want to choose another broker to make it easier to track members'
deposits.

Cheers,
Rob

Rob Nagler wrote:
> Rob Nagler writes:
> > Make sure you write your partnership agreement so that anybody can
> > invest any amount at any time. Once the minimum deposit is met, give
> > the members deposit slips and let them send the checks in directly to
> > E*Trade. This is exactly how my first club operated with E*Trade.
>
> Jim Thomas informed me that E*Trade lumps deposits for his club, which
> makes our penny payment system not useful. This wasn't the case for
> my club, because we mailed or ACHed our deposits separately. I
> strongly recommend you vote to have your members mail their deposits
> directly, anyway, as it eliminates the middleman (treasurer), and
> makes people more directly responsible for tracking their
> investments.
>
> E*Trade is the only broker I know which lumps deposits. Clubs may
> want to choose another broker to make it easier to track members'
> deposits.
>
> Cheers,
> Rob

Rob,
The penny payment system is just a little confusing to me.
I'm sure it's one of those things that will seem elementary
once I jump in but I just don't want to screw up the books
from the start.

Just to clarify, you mean that if I put member A's 50.01 and
member B's 50.02 together it will show up on E*Trade as a
single deposit of 100.03? If this is what you mean then you
are saying other brokers itemize the deposit with more
detail, correct?

If we do use etrade can't I just manually separate the
100.03 or will this be scarring the beauty of the penny
payment system?

Additionally, If I use a broker that does itemize, will
accountsync automatically credit the 50.01 to member A and
the 50.02 to member B? This is the essence of the penny
payment system?

Thanks for your assistance. - Dana

Dana Robert Whicker writes:
> If we do use etrade can't I just manually separate the
> 100.03 or will this be scarring the beauty of the penny
> payment system?

Poetically put, and correct. There would be no point in using the
penny payment system if all the deposits go lumped together.

> Additionally, If I use a broker that does itemize, will
> accountsync automatically credit the 50.01 to member A and
> the 50.02 to member B? This is the essence of the penny
> payment system?

Correct. It is a bit odd to get used to, and it may take a couple of
deposits for people to get their "cents amount" right, but after that,
it is makes operating the club a dream. :-)

Cheers,
Rob