Automatic Investment Plan

Automatic Investment Plan

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Automatic Investment Plan

Automatic investment plan is an investment program that provide an opportunity for investors to make contributions of small amount of money in regular intervals. This program operates by automatically deducting the agreed amount from the investor’s savings account and invested in a retirement account or a mutual fund. Automatic investment plan is the best and the most effective kind of investment that one can opt to use. It is also the simplest since the deduction I done automatically unlike other investments where an individual has to take the money to the bank by himself which is difficult due to like of time. This kind of investment is the most powerful since it can make a great impact on an individual’s future especially where it is practiced on long term investment.

Of course the automatic investment plan make sense to a great number of people in the society and most especially those who are engaged in business field since they understand better what investment can do to an individual’s life. This is because it allows small amount investment and therefore it does not put and individual to financial imprisonment. Automatic investment plan also provides an opportunity for pay yourself first hence it can help individuals to begin building their wealth. Automatic investment plan also works for beginners investors since this kind of investment provides an opportunity to benefit from principle of dollar cost averaging. The investment plan also makes sense to me too since it not only provides opportunities to savings on market stock but can also be used as a retirement savings and hence secures an individual’s future life.

Many people fail to save due to the emotional burden of saving. However, automatic investment plan helps to overcome this challenge that they face by automatically deducting the agreed amount. Therefore, from today I plan to use the principle of AIP which will eradicate the emotional burden that I go through in my savings through the other methods of saving.

References

Lawrence J Gitman, M. D. (2008). Fundamentals of investing. Pearson Higher Education .