Inside Look

Which Auto-Deposit Plan Should I Use?

The easiest (and least expensive) solution to catch market sales? Participate in the market regularly through auto-deposit.

Our auto-deposit feature is an easy way to make sure you’re on top of your achievement game. To provide more flexibility, you have a couple options when setting up your auto-deposit plan.

If you’re still getting used to the idea of a recurring auto-deposit, one solution might be to choose our monthly auto-deposit plan. This could be a good option if you’re a freelancer and your income varies from one week to the next. The monthly frequency helps you tackle your milestones consistently but on a looser time frame.

After you start to feel more comfortable with auto-deposit (or have a consistent paycheck), you may want to opt for our weekly auto-deposit plan.

The weekly plan is an awesome way for you to upgrade to the next investment level, because, like our monthly plan, it provides the added benefit of increased dollar-cost averaging. Essentially, dollar-cost averaging means that since you’re depositing small amounts of money more frequently, weighted average purchase price per share will be lower than the average price of the shares on the days that you bought – because you are participating across market movements, when the market is lower, you are buying more shares.

To understand this better, think about the market as your favorite store. Like your favorite store, the stock market has sales. Sometimes securities are priced higher, sometimes lower.

Pretend your favorite store doesn’t send out emails and the only way for you to know when sales are happening is to stop by. Now, your favorite store has sales, but not every day. And some days the sales are better than others. If you go into the store every day, you’ll be there when something you want goes on sale. However, if you stop in once a month, there’s a lower probability of catching one of the sales.

Since history has shown it’s near impossible to predict when these big sales will happen, the more you “stop by” the market, the more likely you are to catch them.

The easiest (and least expensive) solution to catch the sales? Participate in the market regularly through auto-deposit. Start with monthly auto-deposits and if you’re feeling bolder, work your way up to weekly deposits!

Photo by Agnieszka Cymbalak on Unsplash

Aliza Kellerman Aliza Kellerman is the Manager of Content Strategy at WiseBanyan. When she's not writing about the life and times of the IRA, she's hanging out with her pug.