Regular Investor Plan
We've developed a great product that allows you to invest a set amount of money into one or more funds on a regular basis.
Investing in Managed Funds using a Regular Investor Plan will help smooth out market ups and downs, purchasing more units when the unit price is lower and fewer units when the unit price is higher, and may mean that you are better off than making a lump sum investment(s). A Regular Investor Plan also reduces the risk of a large fall in value from investing a lump sum at a high unit price, only to have the unit price fall. This type of regular saving is often referred to as 'dollar cost averaging'.
For only $250 you could be up and running and on your way to achieving your investment objectives.
Better still, we've reduced the entry fee to 0.50% for all Regular Investor Plans, a saving of over 33% on our normal entry fee!
Benefits and features
- Get started with just $250 a month
- Smoothes out market ups and downs
- May provide a better average price over time
- Avoids the risks of lump sum investing when unit prices are high
- Safer than trying to time the market
- Choose from over 40 managed funds
- Choice of topping up with lump sums
- Ability to change fund selection at any time
- Buy and sell anytime - no lock ins or penalties
- 24/7 online access to your portfolio
Dollar cost averaging explained
The principle behind dollar cost averaging is simple. You invest the same amount each month. In the meantime, the fund's unit price fluctuates with the market value of its assets. When the unit price is lower, your regular contribution buys more units; when it's higher, your regular contribution buys fewer units.
As a result, dollar cost averaging may help deliver a lower average entry price over time.
Single lump sum vs. a RaboDirect Regular Investor Plan
Joe & Jane have each invested $4,500 into the same Managed Fund.
Joe invested his $4,500 as a single lump sum while Jane staggered her investment over 9 months, using a RaboDirect Regular Investor Plan.
Here's an example that illustrates how it works:
Main advantage: Unit price fluctuation
Jane invested $500 on the first day of each month. Because the unit price of the fund fluctuated over the 9 month period, Jane was able to smooth out her unit purchases; buying more units when the unit price was depressed and fewer units when the unit price appreciated.
As a result, Jane ended up with 4774 units, at an average price of $0.94 per unit.
The result: A better return on investments
At the end of the 9 month period the unit price of the fund had returned to $1.00. Joe now had an investment worth $4,500, however Jane, because she had taken advantage of dollar cost averaging, had an investment worth $4,774, over 6% more than Joe.
Remember: dollar cost averaging doesn't guarantee a profit. However, with a sensible and long term investment approach, dollar cost averaging can help you to smooth out the unit price ups and downs.