Tips for Buying ETFs in Automatic Investing Plans
That's what Peter did. He's in Garden City, New York. Let's listen in.
ASK RIC: Peter from Garden City, NY: Hi, Ric. This is Peter from Garden City, New York. Great show and thank you for addressing my questions. My question is related to automatic investment plans. For many years, I automatically contribute to my brokerage account and invest those monies, small chunk of money, within a mutual funds that I own within that brokerage account. Since I also own exchange traded funds within that brokerage account, I was hoping to do the same - automatically transfer money from my checking account and invest those on a regular basis, a small amount of money using the ETFs. But soon after, I realized this is a little bit challenging, so therefore I have a few questions for you. Is it possible to invest automatically or implement the automatic investment plan utilizing ETFs? If so, what needs to happen for this to work? I appreciate it if you address this question. Thank you very much.
Ric: Peter, I appreciate your call and your question. Your questions really should be directed to your brokerage firm. Each brokerage firm has a set of not only policies but features and services that they offer. And it's routine for brokerage firms to allow their clients to engage in automatic investing. As you've described, it's dollar cost averaging at its best. Automatically, every month, a certain amount of money comes out of your bank checking account, goes into your brokerage account, and the brokerage account automatically buys a variety of investments for you.
Some brokerage firms limit this automatic investing to mutual funds. Others also allow it for individual stocks and for ETFs, exchange traded funds, as well. So you simply need to check with your brokerage firm to see if they can facilitate automatic investing into ETFs. If they don't allow it, then you simply need to do it on a manual basis. You can have the money automatically go from your bank to your brokerage account. That's the easy part. And then from there you would place a series of trades on a monthly basis. You might have to do the manually. You might be able to set up a recurring block trading where every month you buy a certain number of shares so that you don't have to enter all the individual trade data.
But the short answer is talk to your brokerage firm. Tell them what it is you want to do, just as you've described it to me, and ask them how to go about doing it. Chances are they'll be able to give you a solution that works for you. And if not, the end of the day, find another brokerage firm that'll cooperate pretty much that simple. That was Peter from Garden State, New York, here on The Truth About Your Future. If you want to ask me your question, do what Peter did, just make a recording of your question on your smartphone and send me the file to AskRic@thetayf.com.