Setting up an automatic investment plan can be a great way to begin building wealth. Automatic investment plans allow you to “pay yourself first” by making regular investments from your checking or savings account. They are one of the best ways to benefit from the power of compounding over time. By taking advantage of many of the planning resources on BaronSeries.com you will be able to estimate how much money you will need to invest monthly to reach any savings goal, from paying for college to becoming multi-millionaire.Using an automatic investment plan is a wise strategy, particularly for beginning investors, because it allows you to benefit from a principle known as “dollar cost averaging.” By investing the same dollar amount every month in a particular stock or mutual fund, you can reduce your cost basis over time. This allows you to buy more shares of a stock or mutual fund when shares are cheaper and fewer shares of the stock or mutual fund when the price is high. Over time, this can help lower the average price that you pay for your shares relative to the current trading price.
To accelerate the compounding effect of an automatic investment plan, you can use a retirement account to invest such as a Roth or Traditional IRA and have your money grow tax free. You can also use automatic investment plans to contribute to college savings vehicles such as Uniform Gift to Minors Accounts (UGMA/UTMA) where the plan’s earnings may be taxed at your child’s rate.
In the Resources section of BaronSeries.com, you will find a number of companies offering no-load mutual funds which have waived their minimum investment requirement in order to help you get started in an automatic investment plan for as little as $50 a month. You will also discover ways that you can find an additional $600-$5,000 a year in your family budget to invest without changing your current lifestyle.
Considering how easy it is to set up an automatic investment plan and the low minimum investment possible through many mutual fund companies, there is really no excuse for not getting started today and if you have children or grandchildren, getting them involved in an automatic invest plan as well. So, take a few minutes to implement this powerful BARON strategy and make your saving and wealth-building automatic.
William R. Patterson is a national best-selling author and award-winning financial coach. His breakthrough book, The Baron Son, has been translated around the world and featured in the Forbes Book Club. William is an internationally recognized business authority who has been a featured guest on over 300 television and radio programs. William’s website, BaronSeries.com, is also winner of three 2008 Web Awards including Best Wealth-Building Site. For more information visit: http://www.baronseries.com.