Automatic Investing Plan - Amassing Wealth One Month at a Time

Posted by animesh on July 18th, 2017

A very famous financial advisor and author wrote a best seller a while back about automatically amassing wealth to end up as a millionaire. The central principle was that when a paycheck comes, people should pay themselves first. As bills roll in and expenses mount, if people have ready access to the savings, it is far more likely to be spent. An automatic investing plan enables an investor to have a certain amount of funds removed from the either the paycheck or bank account at set times and invested in specified investment vehicles, like a mutual funds, stocks, etc.

There are some investment formats that allow you to remove money directly from your paycheck and have it invested. This type of automatic investing plan can take advantage of either pre-tax or after-tax money. The major benefit is that you never have this money in your possession. Because it never ends up in your bank account, you budget without considering it. What you never have, you can't spend. Other investing plans that are considered automatic involve automatic withdrawal from your bank account on a certain day of each month. With this plan, you see the money, but it is part of a structured budget and is pulled out and invested without you having to act on it.

Investing firms offer automatic investing plan options to help beginning investors without large lump sums to get into a pattern of investing for the future. It is typically used in long term investing, such as for retirement. Companies extending this option to their clients often minimize transaction fees because of the amount of transactions. Different firms allow different minimum amounts, some as low as a month. Besides the automatic component, there is a benefit to this systematic approach to investing.

The basic principle is that by investing a set amount at set intervals, you are cashing in on dollar cost averaging. Instead of investing a lot of money at a specific spot in time and watching it go up and down in value, investors purchase however many shares of a specific stock the set investment amount will buy. During a recession, the shares will be at bargain prices, so investors can stock up. The same amount of money will purchase more shares. Systematic investing each month minimizes risk and increases an investor's chance of getting the overall 10% annual Investment Plans In India return that the stock market has historically offered. For more information on investing in investment opportunities usually or normally not found in the marketplace

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