National Association of Investors Corporation

The National Association of Investors Corporation (NAIC), also known as BetterInvesting, is a Michigan-based 501(c)(3) non-profit organization (a not-for-profit organization prior to 1998) whose aim is to teach individuals how to become successful long-term investors. The NAIC is an umbrella organization that had around 4,000 member investment clubs and approximately 40,000 individual members at the end of 2015. Membership has been in a steady decline since a peak of well over 400,000 in 1999.

Many members join because they were exposed to NAIC though their investment clubs. In fact, the original name of NAIC meant National Association of Investment Clubs. Currently one can join NAIC as an individual, whether or not one is a member of an investment club.

NAIC is the legal name of the organization. Its member magazine is called BetterInvesting, and it became the branded name of the association in 2004. NAIC/BetterInvesting is headquartered in Madison Heights, MI, a suburb of Detroit. The organization was founded in 1951 when five investment clubs formed the national association. Its mission is to educate individuals on the benefits of long-term investing in common stocks. With the popularity of 401(k)s and other defined-contribution retirement plans, education regarding stock and bond mutual funds was added.

Depending on their membership level, members have access to online tools for determining whether a stock is that of a quality growth company and is selling at a price that will provide sufficient potential return, educational webinars, First Cut stock studies contributed by the BetterInvesting community, digital and print editions of BetterInvesting Magazine, local chapter support, and other products and services.

The organization stresses four principles for successful, long-term investing. The last principle was added and emphasized in the 1980s and '90s. These principles are: 1) invest regularly, regardless of market conditions; 2) re-invest all earnings; 3) invest in growth companies (and growth mutual funds); and 4) diversify to reduce risk. The heart of the NAIC approach to investing is the third principle -- investing in growth companies. The primary tool to evaluate common stocks is a two-page form with a semi-log graph on the front called the Stock Selection Guide (SSG). The SSG dates to the founding of the organization and was created by George A. Nicholson. The SSG displays a company's 10-year sales and earnings per share history, pre-tax profit margins and return on equity; five-year annual high and low price-earnings ratios and other important information meant to answer two questions: Is this a well-managed company? Is the stock selling at a reasonable price?

The SSG is an aid to help investors make their own judgments about a company's future prospects for growth. The guide provides a way to organize and analyze a company's financial history so that investors can determine its investment suitability for themselves. The SSG relies on fundamental data (information from a company's operations such as earnings and sales) rather than on technical analysis (information about the stock's price movements and trading volume) to determine whether a stock might be a good investment choice.

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