By Allison St. Claire

Trend lines, P/E ratios, book value, upside/downside ratio, Value Line, DRIPS. Five years ago I could recognize those words as English, but didn't have the foggiest idea what they meant or why I would even want to know.

I was a poster child for all the reasons why so many people - especially women - miss out on the chance to secure their financial future. As a single woman, I couldn't afford more than $20 a month to invest. Even if I saved for several months, I could maybe buy a share or two of McDonalds but the broker's fees would drive up the total cost of the transaction to the point where I might never profit from it. I had no idea how to analyze a company's performance. Reading investment advice books helped somewhat, but for me, nothing beat the good old original interactive technology - talking face to face with others who are interested in similar goals, in learning together and supporting one another.

Today, one of my investment nest eggs is worth 57.9% more than five years ago, thanks to having learned all those terms - and much more - in an investment club. By pooling our money and ideas, we are able to look at substantial buys of top-notch stocks. Even better, we learn about investing in a friendly, non-threatening monthly meeting.

Five years ago, co-workers Connie Gilbertson and Bonnie Warner, financial investigators for a woman-owned company which contracted for the federal Resolution Trust Corporation, were intrigued by an article about investment clubs that appeared in a Denver daily newspaper. They invited family, friends and colleagues to attend an organizational meeting, which resulted in the Women of Wealth and Wisdom (WOWW) partnership.

"I helped organize WOWW to become knowledgeable about stocks so I could discuss them without resorting to feelings or hunches," Warner said. "I'm amazed at how many people buy stocks based on a couple of news articles or word of mouth without doing any research."

Extensive research into companies, industries and business trends is part of the commitment members make as a condition of club membership. At each meeting, a team of two or three members makes a presentation about the stocks in a particular industry which they have researched through Value Line (a weekly comprehensive publication of stock analysis and information), company annual reports, the National Association of Investors Corporation (NAIC) stock selection and stock comparison guides, and any other resources they have found.

Club members also set aside "gossip" time, where they share any information - found through newspaper or magazine reports, the Internet, attendance at shareholder's meetings, or attendance at an NAIC event - on companies whose stock the club currently owns or in considering purchasing. In addition, WOWW's education chairwoman presents an easily digestible nugget of information about what often seem to be incomprehensible subjects like upside/downside ratios or the real meaning of relative value.

While groups vary widely as far as composition, dues (if any), and minimum investments, WOWW decided to limit members to 20 partners, each with one vote so that a wealthier partner could not control decisions. Every new member must complete a NAIC investment course, offered through local community colleges. Club members agreed to a minimum required investment of just $10 to accommodate varying personal incomes and circumstances; current individual monthly investments range from $10 to $50.

At the monthly meeting, the club treasurer reports on each stock in WOWW's portfolio, including number of shares owned, original purchase price, current price, percentage of the club's portfolio, current value, and annual return. Each member also receives a personal summation about their share of the club's holdings. Overall, WOWW has exceeded the NAIC return average of 13% a bit - their current compound annual return is 13.83%.

The club's meetings also incorporate everything from discussion to argument, probing questions to outrageous laughter, and examination of members' emotions versus logic regarding various industries. A member's report about Investor's Daily 's ranking of stock in the club portfolio might prompt an intensive review of a stock that has been on a downward trend for three months or more. A better performer might spur a recommendation to increasing the club's holdings, thus sparking lively debate. For new purchases there is ultimately a consensus and/or a vote on whether to purchase a particular stock - and if so, how much they should buy - or whether they should continue to monitor it over coming months or reject it altogether. In making their decisions, WOWW members take into account management trends, price earnings ratios and historic and projected sales and income growth.

WOWW members feel that an all-female setting is an asset to their decision-making process, and one that empowers them as individuals. "It's less intimidating than a mixed or mostly male group," said Mary Conley, one of WOWW's newest members. "Some men tend to presume they know it all, and try to `be in charge.' A women's group is more open and decisions are done more through consensus, and consideration of more intangible, or gray-area information - even feelings on occasion. Men tend to see the black and white of a situation, and `vote' on things."

Rose Gibbons, a public relations assistant noted, "It's often been my experience in mixed sex groups that men take the leadership roles and women let them, so I wanted to avoid that. Also, in my case, I have been in circumstances where I didn't fade back and let the guys run things; sometimes the reaction to that (and me) has been marked and not enjoyable."

The downside to an all-female group? One member spoke for several when she said, "There can be a drawback to women's way of making decisions. We may miss an opportunity because we're likelier to hold back or delay a final decision, where a mixed group may push for immediate action with a `damn the torpedoes, full speed ahead mentality.'"

Plus-size women are well represented in WOWW. "Although we didn't plan it this way, many of our members are plus-size women, although that has not influenced our choice of investments in any way," co-founder Warner said. WOWW member Conley noted, "I think being the people we are, sex or size doesn't really matter. We're people wanting to do something that will have a positive effect on our future. I happen to be a woman of substance who wants to be a woman of substance in more ways than just one."

With the dismal future of Social Security, the increasing life-span of the average American and the irrefutable statistics that more women than men retire poor, there's never been a better time to take control of your financial security, and an investment club can be one avenue to achieving that goal. Not only is it a simple, enjoyable and companionable way to earn, but you may even get an unexpected dividend. According to WOWW member Melissa Mormon, participating in an investment club "takes work and thought - but 'ordinary' people can do it! I've discovered that I'm smarter than I sometimes give myself credit for."

Start Early!

Over the past 64 years, stocks have returned 10.3% a year on average, including reinvested dividends - about twice as much as the return on corporate and government bonds and triple that of money market investments. To take full advantage of returns and secure your economic future, the earlier you begin investing, the more rewards you will reap. Using the average return rate, if you invest $3,000 a year...

...beginning at age 45, you'll have $151,268 at age 65.

The difference in outcomes from youngest to oldest - $691,075 - is staggering. You should start investing at a young age, but remember - you'll never be younger than you are today!

Investment Strategy

The cardinal rules for any investment strategy are to start young and invest for the long run. In addition, the National Association of Investors Corporations (NAIC) encourages its members to follow four principles when investing: