Saving money as part of your investment plan is important for a number of reasons. It can help you in emergency situations, allow you to reach financial goals and enable you to live a comfortable lifestyle. However, many people struggle to save money consistently. Creating a regular savings plan can help you overcome this challenge.
What Is a Regular Savings Plan?
A regular savings plan (also known as RSP) is a method of saving in which you invest regular, fixed instalments of money into your investment vehicle of choice, typically a managed fund. The fund manager then invests these funds into predetermined assets in accordance with the investment instructions you have previously provided.
What Do You Need to Start a Regular Savings Plan?
Starting a regular savings plan is a great way to ensure that you can save money on a regular basis.
The first thing that you will need to do is to choose an investment account that offers a regular savings plan as a feature. Many different fund managers and financial institutions provide these accounts, so it is essential to compare the available options to find the best one for you.
It is also essential to consider the fees associated with each option, as this can impact how much money you can save in the long run.
Once you have chosen a fund manager or financial institution, you must open your account. Most accounts will require you to make an initial minimum deposit to open the account and start investing, so it is important to check the requirements of your chosen provider before you open an account.
Once you have opened your investment account, you must set up your regular savings plan. This plan will outline how much money you want to save each month and how often you wish to make deposits into your account. You will also need to ensure that your account includes instructions on how you want your regularly deposited funds invested so that your accruing funds don’t remain in cash.
What Are the Benefits of Committing to a Regular Savings Plan?
1. You Can Invest Your Income at a Flexible Level
For starters, committing to a regular savings plan can help you invest your income at a flexible level. This means you can start small and increase your deposit amount over time as your financial situation allows. This can be a great way to gradually grow your investment portfolio without putting too much strain on your budget.
2. You can Benefit from Dollar-Cost Averaging
You might have heard the saying that “Time in the market is more important than timing the market”. This is where Dollar Cost Averaging comes in. We all understand asset prices can rise and fall – often in the blink of an eye. But by using dollar-cost averaging, you’re putting the same amount of money in each time regardless of market conditions.
As you are regularly purchasing parcels of the same investment over time, rather than a lump sum of money in one transaction, your investment isn’t as highly impacted by volatility and the pressure of trying to time your investment purchases is minimised.
3. You Can Enjoy an Easy Way to Invest
Many savings plans offer automatic direct debit and automatic investment purchase instructions, so you don’t have to worry about manually transferring funds and then investing them each month. This can make it simpler to stay disciplined with your investment strategy and reach your long-term financial goals.
Start Achieving Your Investment Goals with CCFPG
Committing to a regular savings plan can offer several potential benefits. However, it’s essential to carefully consider your options before making any decisions. Be sure to speak with an experienced financial adviser to discuss whether a regular savings plan is right for you.
If you’re looking for a financial adviser on the Central Coast, Central Coast Financial Planning Group can help you! We know how important it is for you to make the best financial choices for your future, so we develop tailored solutions to ensure your financial goals are met. Call us or book online to secure your complimentary first meeting with our advice team today!
DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.