An automatic investment plan (AIP) is a form of periodic savings that allows you to contribute variable amounts of money to an account that, in turn, invests in a portfolio of securities.
Therefore, we are dealing with a financial savings product. Its main difference with others such as investment funds is the possibility of contributing small monthly amounts. The magic of compound interest does the rest.
Characteristics of an automatic investment plan (AIP)
An automatic investment plan (AIP) has a series of characteristics that should be known. Let’s see the most relevant.
- The first we have already mentioned, the possibility of raising small monthly fees. This allows you to save and invest more easily.
- On the other hand, being automated, the investor does not have to worry about regular contributions to the plan.
- They allow many small investors to access them, by being able to make small amounts of income.
- They can be tailored to the person who is going to invest. Both the amount, the term or the types of investments, including cryptocurrencies.
- A special type of AIP is the Dividend Reinvestment Plan (DRIP). Its operation is similar to that of others, only that in this case the dividends are reinvested in shares.
How to carry out an automatic investment plan (AIP)
Carrying out one of these plans is relatively simple. However, certain steps should be followed.
- First we have to make a financial plan. It would be good to list our expenses and check the part of our income that we need. In this way, we can know our economic availability.
- Then you have to compare. For this reason, you have to look at who offers it, their conditions and their references before choosing.
- A third step is to contact the chosen manager of said plan. They will inform us of everything necessary to start saving and investing. With this we can start saving.
An AIP and cryptocurrencies
Let’s now see a way to carry out an automatic investment, but in cryptocurrencies. It is nothing more than an application of this to the world of virtual currencies. In this way, we can invest in them, but little by little.
The process is simple. We first log in to the appropriate platform. Next, we choose automatic investment. As a third step, we create an investment plan tailored to our needs. Finally, thanks to our automatic investment plan (AIP) we can start.