Help starting an investment company

I'm sure the idea has crossed a few peoples minds over the years, but i would love to start a business that invests in shares/funds/cash, and everything in between but am not entirely sure how to go by it yet.

Before i ring to arrange a meeting with my accountant i would like to get some advice from here first if possible

Basically, a few ideas ive had are something like:

have a PDS drawn up inviting investors to 'invest' in my company
at a guess, maybe 100 people take it on board and pay as little as $100/month to begin with and invest in:

50% shares
35% managed funds
15% cash

Maybe even consider looking at taking out a business loan of $50k to start the business investments off, and have the clients pay this off as part of management fees?

i know theres a million things that need to happen from the initial start of this idea to the final product, but any tips on things to look into?

Is it much hassel getting a company name registered, opposed to a sole trader etc?

any help would be greatly appreciated. Thanks

The first question you'd want to ask yourself is - why would people invest money in your company? Do you have a track record of success in managing other people's money, or a particular expertise with investing? Will people trust you with their hard-earned cash?

What would you investment strategy be? What would be your benchmark's for return?

How would you make money from the whole process? Would you be charging management fees? How much?

Just some things to think about!

Crusher, perhaps you should consider starting an Investment Club vs a company.

You can draw up paperwork with accountant and be up and running fairly quickly.

I used to belong a club years ago ... the issue was finding a suitable time/ day to meet up with everyone. It was a great social outing more than anything. We never made any $$$'s.

That's what I was going to suggest. I know my mum started one and she and all her friends just used it as a poor excuse to all get together once a month drink excessive amounts of alochol and bitch about their husbands or kids, and very occasionally talk about the stock market...

They had fun though...

Haha! Yeah i think i will talk with my accountant next month about investment clubs. Just have to start looking for a few members that will be interested around here!

If only there's a site which lists all Investment Clubs per state with an explanation of what they focus in.

If you want to join an investment club it seems as though you have to create one yourself...and most of them are just group of friends or relatives..etc.

I really want to join a club in Melbourne for people in their mid-20s...and just starting out with investment property and shares. Please advise where I should look...

Hey mate, yeah ive figured you will have to start your own if your interested in this type of thing from what i can see.. I dont know of anyone in my town who does anything like this, but then again.. who knows! haha

I think there will be some interest for it here, as not many people that i know of have had much exposure to investing etc.. alot of people seem to think you have to be rich to start out, and of course very few people know where or how to start out when it comes to investing.

Im no expert, but i think we could get a few things going, so over the next few months once i speak with my accountant and some family friends involved in finance management i will see what i come up with. I like the idea of the unit trust, as everyone can see what there value is, easy calculations etc..

Hi Crusher,

Going into the funds management business you'd need to get an Australian Financial Services License (AFSL) and also have a Product Disclosure Statement if your going to have more than 20 investors per year.

I'm not sure how much an AFSL costs and then you'd have to have a compliance department, etc. It gets messy quickly.

Cheers,

Dan

wow, thanks Dan.. Note taken! haha, i'm sure there will be alot to talk with my accountant / FP about then! lol thanks mate.

The most important thing in my mind is not the 'mechanics' of how to structure the investment business, etc.

The most important question is 'why would people want to invest their money with your company?'.

To attract the capital you will need to have a sound investment strategy, and also have prior runs on the board from your own personal investments.

Most that start these investment vehicles have extensive experience working for funds management companies prior to launching their own funds management companies.

They also have a reputation of delivering consistently higher than average market returns.

Personally I'd suggest that unless you have these things you strongly re-consider taking this any further.

Regards,
Kris