What Is an Automatic Investment Plan?

An automatic investment plan allows individuals to have a certain amount of money transferred from a bank account to an investment account on regular intervals. For example, an individual with an automatic investment plan might decide to invest $50 per month into a particular mutual fund.

Using an automatic investment plan can be very beneficial to investors because it automates the process of investing and saving. They will not have to make a conscious decision to set aside money which can prevent people from wasting expendable income. With this particular tool, many individuals will treat their automatic investment payment as if it were any other bill that had to be paid. 

Without an automatic investment plan, it is up to the discretion of the individual to set aside a certain amount of money for investing. In most cases, the individual never get around to allocating the money to investments and use it for something else. With an automatic investment plan, you can generally save more money because you do not have to plan for anything. 

When setting up this type of plan, an investor should look at the costs involved. Many companies will do this for no charge as long as you are investing.