How to set up an investment plan?

 The implementation of an investment plan by young workers and by all people who want to prepare a medium or long-term project is an important step that you must take the time to prepare. Discover in this article the different steps to realize an investment plan that will allow you to invest well in time and try to obtain your financial freedom and become an annuitant.

What is an investment plan?

While it may seem more logical for a young investor with a lower investment capacity to buy a single Danone share or a single TotalEnergies share... and wait to have more funds to invest to allocate money to the purchase of other shares, the investment plan allows, via new generation stock market brokers such as Scalable Capital, to be able to decide to program one's investment over time.

In concrete terms, it is a matter of programming an investment of a chosen amount (generally from one euro), on the value of one's choice (share or ETF), and on the desired period/frequency. For example, an investment of 5 dollars per month on the Danone share, would allow at the end of one year to own a full share.

The investment plan can be made on several shares or on baskets of shares more commonly called ETF or tracker. In some cases, it is even possible to set up an investment plan on crypto-currencies.

An investment plan: for whom?

The investment plan is available for any major investor. There is no minimum or maximum amount to access it, which will suit any type of investor. The investment plan is particularly recommended for investors who do not have much knowledge of the stock market (we will see this in more detail in the advantages).

The investment plan is also the ideal solution for those who don't want to have to log into their account every day or week to follow the markets.

Even if you are an active trader, the investment plan could allow you to build long-term capital based on your trading gains, without having to worry about managing an additional portfolio.

Ultimately, the investment plan is a solution designed for investors who don't want to spend too much time and energy managing a stock portfolio but have a medium to long-term investment goal.

Advantages of an investment plan

The advantages of an investment plan are multiple, but the main advantage is the simplicity and flexibility for the user. It is perfectly possible to change the investment plan according to your personal situation.

Many investors are seduced by the offers that banks make to invest a few dozen dollars per month on investment supports, which are often not very remunerative although sometimes offer a guaranteed return. The investment plan is great in the sense that it allows applying to the stock market one of the concepts that investors prefer, provided of course that they accept an additional risk compared to a savings plan like a Livret A.

Since we are talking about risk, the investment plan has a major advantage since it also allows us to limit, or rather dilute, the risk. An investor who decides to invest 3,000 dollars today would be exposed to the risk of not investing at the right time compared to an investor who chooses to set up an investment plan of 80 dollars per month over 3 years.

In the stock market, one of the factors that make the difference between winners and losers is the rigor with which investors will respect their trading plan or investment plan. Many people get carried away by emotions when the markets are in extreme conditions. The investment plan takes this problem out of the equation.

Disadvantages of an investment plan

It's hard to find drawbacks to the principle of an investment plan, but there are a few constraints to be aware of before jumping in.

If you buy fractional shares every month or quarter, it will not be possible to sell your investment until you have acquired the entire share. This can be a handicap if you want to sell all your investments quickly, especially in the case of a stock market crash or a personal event requiring unforeseen expenses. So keep in mind that the amounts allocated to your investment plan should not be amounts you need in the short term and that it is a medium or long-term investment.

As a reminder, medium-term corresponds to an investment horizon of 2 to 5 years, and long-term to an investment horizon of 10 to 15 years.

Also, if you have a good knowledge of the financial markets or if you wish to acquire this knowledge to become an expert in stock market investment, you will surely obtain better results by analyzing the market to find the most opportune moments to invest and rebalance your portfolio from time to time.

How to set up an investment plan in practice

Among the different stock brokers that offer to set up an investment plan, we would like to highlight the offer of Scalable Capital, which allows you to do it easily and under advantageous conditions.

In the case of Scalable Capital, setting up the investment plan is very simple since you just have to choose the security you are interested in among a selection of stocks, ETFs, and cryptocurrencies, then choose the amount and the frequency (monthly, fortnightly or quarterly).

Several execution dates are possible to make the scheduled purchase, so you can choose between the 1st, 4th, 7th, 10th, 13th, 16th, 19th, 22nd, or 25th of the month.

It is possible at any time to increase the amount of the programmed investment or to reduce it and even stop it if necessary.

Scalable Capital has a unique feature that allows you to adapt your investment plan to inflation by choosing that the amount evolves each year taking into account (at your choice) inflation of 2%, 3%, or 5%.

How much does an investment plan cost?

In general, there is no additional cost for the implementation of an investment plan, and the same rates as the proposed brokerage offer are applicable.

In many cases, it is even more advantageous for the investor when it comes to an investment plan, as is the case with Scalable Capital, which offers free execution of transactions on 6,000 shares and 1,500 ETFs if they are carried out as part of an investment plan.

All_of_our_information is, by nature, generic. It does not take into account your personal situation and does not constitute in any way personalized recommendations for transactions, nor does it constitute financial investment advice, nor does it encourage you to buy or sell financial instruments. The reader is solely responsible for the use of the information provided, without any recourse against the publishing company of being possible. The publishing company of cannot be held responsible for any error, omission, or inappropriate investment.

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