Convert your 5million into shares of the investment company, the rest will fall into place after that.

@Much Know..Thanks, ur point is cool. What I understand from you is:-
Year 1 :- 5 members with 10shares of 100,000/= each.
We make a profit in the first 2 years of say 500,000 (But no dividends declared).
Year 3:- 5 new members joined each with 10 shares of 100,000/=.
Year 4 we make an accummulated profit of 2M.
Does it mean we will divide the profit Equally??? Or will we take the duration of investment in account? and how will the distribution going to be? I do understand that in shares all te shareholders get the same amount of dividends per share irrespective of when you bought the shares provided it's b4 the books close.... BUT .. How can my 4 Years of investment give me the same return as the 1 Year Investor? (Assuming an equal profit distribution afterall every one of us contributed 1M).

@McReggae .. Woking out the value of each member means dividing the profits based on the capital contributed.what I understand from you is every year we credit the shareholder/partner with the portion of the profit made..meaning any new partner will not get nothing out of it? am I right?? I believe time here is also to be considered I mean the time of when a new member joins..he will be paid based on the capital invested and the period of of his investment..am I right?

Any litrature on investment clubs will highly be appreciated. we don't wanna start and end up turning the investment club to a BOXING CLUB..

If I sound stupid just bear with me we r new in this field.

@kyukkamba, u will to understand NAV, i have copy pasted below a simple explanation. U will need to operate an investment company and run it like a mutual fund i.e. the way unit trusts operate.

"Net asset value is most commonly used in the context of open-ended funds. Shares and interests in such funds are not traded between investors, but are issued by the fund to each new investor and redeemed back to the fund when an investor withdraws. A fund will issue and redeem shares and interests at a price calculated by reference to the NAV of the fund, with the intention that new investors receive a fair proportion of the fund and redeeming investors receive a fair proportion of the fund's value in cash."

@Mukiha..
Since the 40K is like "Goodwill" dont u think it should be credited directly to the Existing Members BUT NOT to the new member's account?
Otherwise ur explanation is excellent. it elaborated more on Mkonomtupu's point.
I think this cleared most of my doubts.

Thank you all very much.

nb:@Mukiha ..by the way how much did u buy Unga for? I have 25,000 in my account dont no what to do wt it ... do u advise me to? at what price? just tell me YES or NO ...I dont need no reasons.