Systematic Investment Plans

Making small, regular monthly investments is a great way to build money for your goals, but finding the right program for you takes a little investigation. For example, if you hear about systematic investment plans, it’s a good idea to look into them carefully before investing. Here are some of the disadvantages:

• There can be high “creation and sales charges” the first year—as much as 50 percent of the amount you invest in your first 12 payments.



• You often must make a long commitment to the plan—10 or 15 years.



• If you terminate your plan or stop making investments before the expiration date you could face a sales charge of up to 50 percent of the amount you invested.

There are better alternatives—ones that are more flexible and generally won’t cost you money for starting or ending automated funds transfers from your bank or credit union account.

• Some mutual funds allow you to buy shares without an initial deposit and make investments of as little as $50 a month.



• Your retirement plan may allow you to invest through an automatic payroll deduction.



• Some college savings plans permit monthly contributions of as little as $50.

Before you put money into a systematic investment plan:

• Read the prospectus to learn about the plan. Don’t rely on sales literature or a broker’s presentation.



• Use FINRA BrokerCheck to check the background of your investment professional and his or her firm. For smaller brokerage firms, check with your state securities regulator.