It's hard to save toward life's bigger goals when you're busy meeting day-to-day expenses. One way to be sure you are investing for your future is to use an automatic investment plan.

Automatic Investing is a Worry-Free Way to Save

  • Convenience. Staying committed to your goals can be easier because investments happen automatically. You don't have to mail a check each month or miss the opportunity to invest because you spent the money elsewhere.
  • Consistency. You'll invest no matter what's going on in the financial markets. It may be tempting to stop investing when market conditions are unstable or unfavorable. But successful investments are more likely to be the result of time in-not timing of-the stock and bond markets.
  • Efficiency. You will buy more shares when the price is low and fewer shares when the price is high because you invest the same amount of money each month. This can lower your average cost per share. Known as dollar-cost averaging, this strategy doesn't ensure a profit or protect you against loss in declining markets. To take full advantage of dollar-cost averaging, you must invest at regular intervals, even during market downturns.

Regular Investing Can Pay Off

Consistently investing a fixed dollar amount can add up significantly. The hypothetical chart below shows the growth of $50, $100 and $200 automatic monthly investments over time, beginning with a balance of $2,500.


See how automatic investing affects this hypothetical portfolio.

Chart based on these assumptions: Monthly investment is made at the beginning of each month. Investment begins with a balance of $2,500 and potentially earns an 8% average annual return. All projections are before taxes are paid. This information is for illustration purposes only and is not intended to represent any particular investment product.

It's a Flexible Way to Invest

You can transfer money electronically from a bank or similar account into a mutual fund or other investment at regular intervals. You also can use direct deposit from your paycheck to invest.

  • Personal savings, checking or credit union account
  • Direct deposit from your paycheck
  • Direct deposit from other sources, such as military allotments or Social Security payments

Finding Extra to Invest Can Be Easier Than You Think

Review your current financial situation to see if you can start an automatic investment plan. Track your spending for a few weeks. How much could you save each month by eating out less often-$50, $100? Prioritize your goals, and you can start saving-even if it's just a little-for your goals. Here are some other places to find extra cash:

  • Salary increase from a promotion
  • Annual pay raise
  • Extra money from reducing entertainment costs
  • Paying off a car loan or credit card debt
  • Tax refund
  • Changing your federal and state tax exemptions to increase your take-home pay

Automatic Investing Works for Many Accounts Types

Many investment companies offer automatic investing or a direct deposit service, so you can establish an automatic investment plan in whatever type of account suits your goals.

  • You probably use automatic investing if you participate in your company's 401(k) or other retirement plan, in which your pre-tax money typically is direct-deposited into your account.
  • To contribute more toward retirement, consider making an automatic investment into a Traditional or Roth IRA. Just remember, the automatic investment can't exceed annual IRA contribution limits.
  • To save toward college expenses, you can automatically invest into a 529 savings plan or other college savings account.
  • For other goals, such as a car or home, consider a standard individual or joint account that doesn't have limitations on the purpose for the money (retirement or education).

Typically, mutual fund companies require a minimum investment, such as $2,500, before you can automatically invest. Compare Our Asset Allocation Portfolios, One ChoiceSM Target Risk Portfolios and One ChoiceSM Target Date Portfolios, that require an initial investment of only $500 and a $100 automatic monthly investment plan.

Committing to an automatic investment plan can help you reach your goals. Start now to invest toward your future.