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Create a Systematic Investment Plan

Systematic investing is a simple and worry-free method of investing money. Learn more about what it entails.
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Systematic Investing with 4Thought Financial Group

"One of the most effective ways to maintain and potentially improve your standard of living in the long term is to systematically save and invest your earned income over time."

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Learn more about High-Impact, Low-Cost Systematic Investing

It can be difficult navigating a path through the tricky waters of investing, and one of the many obstacles to success lies in knowing when the best opportunity presents itself to enter the market. Volatility and economic uncertainties can conspire to disrupt even the most carefully constructed plans, but there is an investing approach which overcomes this problem: systematic investing.

Systematic Investing is a simple method of investing money which allows you to make regular payments into a mutual fund scheme, investment advisory account, or other investment vehicle.

 

How Does Systematic Investing Work?

Systematic investing operates by enabling you to purchase a certain dollar amount of shares of your investment vehicle(s), which are calculated on the market value for that particular day and for that particular time. You will build up an account, or "portfolio," which has been purchased at variable rates depending on each purchase date.

The Beauty of Cost Averaging

By averaging out the price of your purchases, systematic investing takes the uncertainty of market timing away from your investing. When the price of a unit is low, you get more for your money; when it is high, less. But because the price is averaged out, you can overcome volatility and market timing uncertainty over the long-term.

Compound Interest

The famous American business investor Warren Buffett once remarked "My wealth has come from a combination of living in America, some lucky genes, and compound interest."

And he wasn't wrong. Understanding compound interest is critical in maximizing your investment opportunities. In fact, even Albert Einstein is often credited with saying that "the strongest force in the universe is compound interest."

So why is compound interest so powerful? The answer: time. Let's take an example to demonstrate:

  • If you began putting aside 100 dollars per month at the age of 30 -- at an average interest rate of 7 percent per year -- your total investment when you turned 50 years old would be worth 51,000 dollars.
  • Contrast this with if you had begun your investment 10 years earlier, using the same interest rate and the same monthly investment. In this example, your total investment would be worth almost 120,000 dollars when you reached 50 -- more than double the amount in the first example!

There are a number of online systematic investing calculators that allow you to explore the power of compound interest in more detail.

Why Should You Opt for Systematic Investing?

There are a number of benefits to utilizing a systematic investing approach. Some of them include the following:

  • Flexibility: You can increase or decrease your investments at any time, or even halt your contributions should your personal circumstances change.
  • Simplicity: By setting up a standing order with your bank, you don’t have to worry about making your regular investments. Everything can be automated, while you sit back and let your money work for itself.
  • Discipline: Investing requires discipline. But this doesn't have to be an onerous task. With systematic investing, you can develop good investing habits and achieve your financial goals at the same time.
  • Long-term growth: Over time, systematic investing will work to deliver beneficial gains while minimizing market timing risk.

So don't delay. Begin your systematic investing plan today and start reaping the financial rewards that this powerful financial tool presents.

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