The National Association of Investors Corp. (NAIC) is a nonprofit organization founded in 1951, dedicated to providing investor education and promoting investor success. The association, based in Madison Heights, Michigan, operates primarily under the name BetterInvesting and comprises both investing clubs and individual investors across the United States.
Note: It should not be confused with the National Association of Insurance Commissioners or the North American Industry Classification System.
Key Insights into the NAIC
- The National Association of Investors Corp. (NAIC) promotes investment education and support, fostering successful long-term investors.
- Known publicly as BetterInvesting, the NAIC is a nonprofit organization formed primarily by investment clubs and their members.
- The organization publishes a magazine by the same name and maintains extensive online resources, including traditional training events and seminars.
Delving Into the National Association of Investors Corp.
The National Association of Investors Corp. (NAIC), branded publicly as “BetterInvesting”, is a Michigan-based 501(c)(3) nonprofit. This organization aims to empower individuals by teaching them how to become successful long-term investors. By 2018, the NAIC had around 3,000 member investment clubs and more than 34,000 individual members.
The organization’s’s member magazine, BetterInvesting, shares its name since 2004. Founded in 1951 by three pioneering investment clubs, its mission centers on educating individuals about the benefits of long-term investments in common stocks. As 401(k)s and other defined-contribution retirement plans gained popularity, the educational scope expanded to cover stock and bond mutual funds as well.
Members access online tools to determine if a stock belongs to a quality growth company and is priced to offer sufficient potential returns. Benefits include educational webinars, First Cut stock studies from the BetterInvesting community, digital and print editions of BetterInvesting Magazine, local chapter support, and more.
NAIC Core Principles for Investment Success
The NAIC emphasizes four key principles for successful, long-term investing:
- Invest regularly, regardless of market conditions
- Reinvest all earnings
- Invest in growth companies and growth mutual funds
- Diversify to reduce risk
Central to NAIC’s investment philosophy is the principle of investing in growth companies. The primary tool used to assess common stocks is the Stock Selection Guide (SSG), a pivotal analytical form created by George A. Nicholson with a semi-log graph on the front. The SSG includes a company’s 10-year sales and earnings per share history, pretax profit margins, return on equity, and five-year annual high and low price-earnings ratios, providing essential insights to answer:
- Is this a well-managed company?
- Is the stock selling at a reasonable price?
The third principle, “Invest in growth companies”, anchors NAIC’s investment strategy, while reinvesting all earnings gained emphasis during the 1980s and ’90s.
Related Terms: National Association of Insurance Commissioners, North American Industry Classification System, 401(k), growth companies, Stock Selection Guide.
References
- BetterInvesting. “Our History of Helping Stock Investors”.
- Betterinvesting. “Fact Sheet 2019”.
- BetterInvesting. “BetterInvesting Mission & Method of Stock Investing”.
- Betterinvesting. “Individual Investors”.
- BetterInvesting. “What Are the BetterInvesting Principles?”
