SIC 6799 Investors, Not Elsewhere Classified

SIC 6799

This classification covers establishments primarily engaged in investing, not elsewhere classified. Businesses covered in this industry include investment clubs, commodity contract pool operators and trading companies, and venture capital companies.

NAICS CODE(S)

523910

Miscellaneous Intermediation

523920

Portfolio Management

523130

Commodity Contracts Dealing

523999

Miscellaneous Financial Investment Activities

Investment Clubs

An investment club is a group of individuals who meet regularly, usually once or twice a month, and pool their money, time, knowledge, and efforts to discuss and invest in securities. The investment club is a method whereby individuals are able to gain experience and acquire knowledge about stocks, financial statements, and securities markets. It is a proven means of learning and profiting by doing with others what an individual cannot accomplish alone. The primary goals of an investment club are to educate the individual members to make a profit on the money invested and to encourage social harmony among the members for greater productivity. Investment clubs also serve a vital national function in that they create many new investors trained in successful investment techniques, and in so doing, provide a substantial and regular flow of capital for the needs of growing industries.

Better Investing (formerly the National Association of Investment Clubs) is a nonprofit organization owned by its membership whose purpose is to encourage the creation of investment clubs with a goal of becoming successful operations. Founded in 1951, Better Investing has grown to a level wherein the total new monthly money invested through its membership investment exceeds $131 million. The total holdings of Better Investing members' portfolios exceeds $117 billion. According to Better Investing statistics, in the mid-2000s there were nearly 20,000 investment clubs worldwide with an estimated 500,000 members.

An investment club must file tax returns like any other business. When the club adopts a partnership format, the individual members pay taxes on dividends and realized capital gains even though the members leave their money in the club for many years. The partnership must also file the partnership information return form, which informs the Internal Revenue Service of the financial distributions made to individual partners. The investment club may request an exemption from filing this form by writing to the U.S. Treasury Department. If an exemption is granted, the partners must still file their share of club income on their personal tax forms. If the club is a corporation, it must pay taxes on its earnings, with no tax liability accruing to the members until a distribution is made. In 2000, investment club members were required to file a Form 1065, U.S. Partnership Return of Income, and a Schedule K-1, Partners Share of Income, Credits, and Deductions, on individual tax returns. While the club does not have to pay federal income taxes, it must report portfolio results to the IRS, and include each member's share of the account.

In the mid-2000s Better Investing had over 220,000 members. The average member household income was $114,100, and over 72 percent of members held a college or post-graduate degree. The average age of an investment club was four years with an average of 11 members. The median member age was nearly 56 years old. About 54 percent of investment clubs were women-only; 38 percent, men and women; and 8 percent, men-only. The average club member invested $84 per month through the...