of February 2 and got interested."

I received the above e-mail from Mr Anthony Ogola, 23, and after two phone calls from him, I thought I should introduce him to the basics of investing in shares.
First, I took him on mini-tours of the Capital Markets Authority (CMA) and the USE.
At CMA, Ms Hope Ejang, the public education officer, explained to him CMA's role.

"We are also promoting the formation of investment clubs and in fact this week we are coming to your university (Kampala International University) to talk about investment clubs," she explained.

The concept of investment clubs excited Mr Ogola given the advantages.  Investment clubs are usually groups of friends or co-workers, who meet regularly to discuss company and to make decisions about which shares to buy and sell.

All members contribute small amounts of money, which is deposited on a joint bank account.  Ideally, the members do search and report on promising companies and on those the group has already invested in.

If you are a student interested in investing in capital markets, join one of the investment clubs in order to start investing early.
You do not have to spend any money initially because CMA provides the money for starting.  

"We plan to set up investment clubs countrywide," Ms Ejang went on.  "We do it by getting a number of students to invest in capital markets."

The students are given a draft constitution, guidelines and the amount of money given depends on what the school administration recommends.  However, CMA does not regulate them, but helps them start up. In addition, CMA recommends that every investment club opens a bank account and has a patron who comes from the capital markets industry.

If you are a student interested in learning about investing, an investment club will be a good start because the focus is on both learning and implementing.  Ideally, they have an education officer who invites guest speakers.

Club members seek to explore new ideas and discuss investing issues. One month a member might present his/her findings on say investing in Treasury bills and another month a member might report on a book about a prominent local investor.

Over time, the club might be learning other ways of valuing shares and discussing interviews published in newspapers regarding the performance of a listed company. 

This unique approach partly explains why in more developed countries; the value of the holdings of investment clubs often rivals those of large mutual funds.

If you were not a newcomer to the investing world, the beauty of investment clubs would be availing you information about companies, especially if you do not have the time.

Another is the opportunity to bounce thoughts off others and get some additional perspectives besides learning from other seasoned investors who have expertise in areas you might be ignorant about.
Next week we shall look at how to form an investment club.

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