What better way to dip your toe in the stockmarket than to do so with your friends? Investment clubs are growing increasingly popular as friends and colleagues club together to take their chances on the stock market.

Once you have decided to set up a club, the best plan is to draw up a constitution, setting out how much each member will contribute each month and outlining what will happen when a member leaves.

Register with Hargreaves Lansdown, the stockbroker, and you will receive a constitution document to help you get set up. You can monitor your portfolio online, as well as buy and sell shares via the telephone or online.

Each online trade costs between £9.95, for shares worth up to £500, to £29.95 for shares worth more than £20,000.

Proshare, the investment club website, also allows you to track your portfolio online, but you can choose which stockbroker to deal with. Proshare also offers a manual on how to start a share club, including a sample set of rules and a constitution, at a price of £29.

Some hints and tips:

A variety of ages and jobs among members is vital. Some clubs suffer because all members share the same expertise. An investment club made up entirely of scientists might know a lot about pharmaceuticals, but nothing about retail.

Membership must be active. Enthusiasm is high among members in the early days, but people soon lose commitment. It is essential for all members to attend the meetings and discuss the shares.

A great deal of the burden for running the club will fall on the treasurer. Setting up bank accounts is especially fiddly since the Financial Services Authority (FSA), the City watchdog, brought in money-laundering regulations.

Clubs usually meet only once a month, but the FTSE changes every minute. Clubs must, therefore, appoint a "champion", who can check the share prices each day.

Rules are not made to be broken. Operate a strict stop-loss policy. Agree to sell a share if it drops, say, by 40 per cent, no matter how passionate you may be about it.

Do not put in too much money at first. £50 per month is about average. You can increase your investments as your confidence grows.

The hottest tip? There is no such thing as a hot tip, but there is always at least one Arthur Daley in each club who met someone down the pub who knows someone . . .

Remember, no one can be paid for services to the club. This is a legal requirement

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