After a decade of decline, investment clubs are starting to increase in number again.

Nationwide, the number of clubs peaked at 14,101 in 1970, dropped to 3,200 in late 1980, and has grown to 4,102 since. In the Washington area, there are about 106 clubs.

Murray Hamburg, president of the local association of investment clubs, describes them as similar to mutual funds, but members do their own research and make their own decisions, thus paying no fee to a fund manager. But investors often lack grounding in stock analysis, and depend on an analysis method developed by the national organization.

As capitalist "cells," with an average size of 15, they meet once a month to pool knowledge and a minimum $10 per member to play the stock market. Members buy "units," or shares, in the fund. They can withdraw equity at any time.

Thomas O'Hara, chairman of the National Association of Investment Clubs, says that one reason for the interest in stock and investment clubs is the recent half-year decline in the market. "We get an awful lot of people [who] tell us that stocks are the only thing that's not inflated," he said.

One federal worker who is trying to form an investment club added another rationale for their popularity: the expansion of financial services that has evolved through such developments as the merger of Dean Witter Reynolds with Sears Roebuck. "That particular merger in the financial community will bring to . . . people who shop at Sears, the ability to shop for stock . . . ," she said.

Now she is looking for ways to find out about stocks. She views investment clubs as a classroom in which to learn stock analysis to help to develop her own portfolio.

Julia Walsh, head of a Washington brokerage, describes investments clubs as "a learning process, and I think it is a very fine learning process." Her firm, Julia Walsh and Sons, handles four investment club accounts.

Most stock club members and officials echoed that sentiment. Clubs can study many new stocks each month by assigning individual stocks to members Other members then use that information for their portfolios.

William McGowan, chairman of MCI Communications, Inc., who addressed a group of investment clubs last month, observed that club members represented much more stock buying power than just that of the clubs.

The NAIC estimates that investment club members have an average personal portfolio of $70,000. Chairman O'Hara said the estimate is based on a nonscientific sampling of 220 clubs. "This is heavily weighted by a lot of our older members" who have been saving and investing for many years, he added.

The NAIC said that only 30 percent of club membership is under 40 years of age. Still, O'Hara said, much of the recent growth in interest in clubs comes from younger people.

While investment clubs usually stick to stocks, some have gone into other investments. One Washington group called the Standard Investment Club, Inc., purchased a Holiday Inn in Northwest Washington in 1973. The club, composed predominantly of black physicians, sold the hotel for an undisclosed sum to Howard University in 1981. The club was founded in 1961 by doctors from Howard University hospital, each contributing $25 a month.

Securities and Exchange Commission regulations make it difficult for individual investors to locate clubs. The local association cannot refer an investor to a club because it would have the effect of recommending a particular portfolio, and that requires SEC licensing.

There are some good reasons to start from scratch anyway, said Gordon Larson, chairman of the Washington Metropolitan Council of the NAIC. Clubs should usually be "affinity groups," he said, explaining that if you are cautious, "you wouldn't want to get into a group of plungers."

It is easier to start fresh, said one person who is establishing a club. An existing group would "have some basic philosophy that newcomers would have to fit with or they would have to become abstainers a lot," she said.

One problem groups face is how to get through hard times without breaking up. The club that won this year's best portfolio honor has had some bad times, according to Jack Pomeroy, president of the RPC Investment Club. "We were taking it on the chin in previous years," he said.

According to RPC's former president, Frank Bowen, the club started in 1973 with a unit price of $10. The unit price sank to a low of $2.56 in 1974.

Bowen said persistence held the club together. Bowen preached that "the lower the market goes, the closer it is to the bottom." The group stuck together and picked up some good bargains in the market trough of the mid-'70s, Bowen said.

The tax man is a problem, too. The NAIC recommends limited partnerships to avoid being taxed both individually and as a corporation. But that means that each year members pay tax on paper profits, or deduct paper losses, from gross income. When money is withdrawn, no tax is paid.

O'Hara said the NAIC is working on a way to let clubs put their stock into Individual Retirement Accounts. That would draw more cash into investment clubs and increase membership, he said.