Investing regularly and steadily is one of the keys to building long-term wealth. However, finding the time and drive to make regular purchases can be difficult for many people. That’s where Merrill Edge Automatic Investment Plan comes in. This feature allows buyers to set up regular purchases, making it easier to build wealth over time through a technique known as dollar-cost average.
What is Dollar-Cost Averaging?
Dollar-cost average is an investment approach that involves spending a set amount of money at regular times, regardless of the market price of the investment. By spending the same amount each time, you end up getting more shares when prices are low and fewer shares when prices are high. Over time, this can lower the average cost per share, possibly improving your long-term profits.
How Merrill Edge Automatic Investment Plan Works
Merrill Edge Automatic Investment Plan makes it easy to adopt a dollar-cost average approach. Here’s how it works:
- Set up repeated transfers: You can set up scheduled payments from your bank account or another Merrill account to your Merrill Edge financial account on a regular basis (e.g., weekly, bi-weekly, monthly).
- Choose your investments: Once the funds are in your Merrill Edge account, the Automatic Investment Plan will immediately put the money in the mutual funds or ETFs you have chosen.
- Sit back and let it grow: As you continue to make regular purchases, your stock will grow over time through the power of compounding returns.
One of the key benefits of the Automatic Investment Plan is that it takes the passion out of buying. By spending a set amount at regular intervals, you avoid the desire to try to time the market, which is extremely difficult to do successfully.
Benefits of Merrill Edge Automatic Investment
Using Merrill Edge Automatic Investment Plan offers several benefits:
- Convenience: Setting up regular donations means you don’t have to remember to make payments manually each month. The process is automatic, taking up your time and mental energy.
- Consistency: By saving the same amount at regular intervals, you can build wealth over time through the power of compounding returns.
- Potential for lower costs: Dollar-cost averaging can possibly lower your average cost per share, as you end up getting more shares when prices are low and fewer shares when prices are high.
- Flexibility: You can choose the timing of your investments (e.g., weekly, bi-weekly, monthly) and the specific funds you want to invest in, allowing you to tailor the plan to your individual needs and tastes.
- Integration with other Merrill Edge features: The Automatic Investment Plan works smoothly with other Merrill Edge features, such as the ability to move funds between your Merrill Edge account and your Bank of America accounts.
Getting Started with Automatic Investing
Setting up an Automatic Investment Plan with Merrill Edge is a simple process:
- Open a Merrill Edge financial account: If you don’t already have one, you’ll need to open a Merrill Edge account. This can be done online or by meeting with a Merrill Edge agent.
- Link your bank account: Connect your bank account to your Merrill Edge account so that you can easily move funds for your regular purchases.
- Choose your investments: Decide which mutual funds or ETFs you want to put in through the Automatic Investment Plan. Merrill Edge offers a wide range of investment choices across different asset types and industries.
- Set up your scheduled transfers: Determine how much you want to spend and how often (e.g., weekly, bi-weekly, monthly). You can set up the regular payments from your bank account or another Merrill account.
- Review and monitor: Periodically review your scheduled purchases to ensure they are still matched with your financial goals and risk tolerance. You can make changes to your plan as needed.
Comparing Automatic Investing to Other Strategies
While automatic investing through Merrill Edge Automatic Investment Plan offers many benefits, it’s important to consider how it rates to other investment strategies:
- Lump-sum investing: Some investors prefer to invest a big sum of money all at once, rather than investing smaller amounts over time. Lump-sum investment can possibly lead to higher profits if the market performs well, but it also carries more risk if the market falls soon after spending.
- Actively managed investing: Some investors prefer to actively handle their accounts, making investment decisions based on market factors and their own research. While this method can possibly lead to higher profits, it also takes more time and effort, and there is no promise of success.
- Robo-advising: Robo-advisors are automated investment services that use computers to build and handle investment portfolios based on an investor’s goals and risk tolerance. While robo-advisors can be a cost-effective way to spend, they may not offer the same level of personalization and customizing as working with a human financial advisor.
Conclusion
Merrill Edge Automatic Investment Plan is a handy and effective way to build wealth over time through a dollar-cost averaging approach. By setting up regular payments and investments, you can take the feeling out of spending and focus on your long-term financial goals. With its freedom, connection with other Merrill Edge features, and possibility for lower costs, the Automatic Investment Plan is a useful tool for investors looking to build a diverse portfolio and grow their wealth over time.