What Is the National Association of Investors Corp.?
Let me explain what the National Association of Investors Corp. (NAIC) is. It's a nonprofit organization that started in 1951, focused on delivering investor education and helping people achieve success in investing. Based in Madison Heights, Michigan, it consists of investment clubs and individual investors across the United States. Today, you'll mostly hear it referred to as BetterInvesting.
Don't mix it up with other groups using the NAIC acronym, like the National Association of Insurance Commissioners or the North American Industry Classification System.
Key Takeaways
Here's what you need to know: The NAIC provides investment information, education, and support to build successful long-term investors. Under its public brand BetterInvesting, it's a nonprofit mainly composed of investment clubs and their members. It publishes a magazine called BetterInvesting and offers detailed online resources, along with traditional training events and seminars.
Understanding the National Association of Investors Corp.
I want to dive deeper into the NAIC, which you might know better as BetterInvesting. This is a Michigan-based 501(c)(3) nonprofit aimed at teaching individuals how to become more effective long-term investors. It acts as an umbrella for around 3,000 member investment clubs and over 34,000 individual members as of late 2018. Originally, it was called the National Association of Investment Clubs.
The member magazine is named BetterInvesting, and that became the association's branded name in 2004. Founded in 1951 by three investment clubs, its mission is to educate on the advantages of long-term investing in common stocks. As 401(k)s and other defined-contribution plans grew popular, it expanded to cover stock and bond mutual funds.
Based on your membership level, you get access to online tools for checking if a stock belongs to a quality growth company and if its price offers good potential returns. You also receive educational webinars, First Cut stock studies from the BetterInvesting community, digital and print versions of BetterInvesting Magazine, local chapter support, and various other products and services.
NAIC Core Principles
The NAIC emphasizes four principles for successful long-term investing, and I'll outline them here. First, invest regularly, no matter the market conditions. Second, reinvest all earnings. Third, invest in growth companies and growth mutual funds. Fourth, diversify to reduce risk.
The Heart of the NAIC Approach
At the core of the NAIC's investment method is the third principle: investing in growth companies. The main tool they use for evaluating common stocks is a two-page form with a semi-log graph on the front, known as the Stock Selection Guide (SSG). This dates back to the organization's founding and was created by George A. Nicholson. The SSG shows a company's 10-year sales and earnings per share history, pretax profit margins, return on equity, five-year annual high and low price-earnings ratios, and other key data. It addresses two main questions: Is this a well-managed company? And is the stock selling at a reasonable price?
The second principle gained emphasis in the 1980s and '90s.
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