There are two types of investors
Type 1- Those who invest their money manually @end of each month.
Type 2- Those who invest automatically @ the start of each month.
Today's topic discussion is which option is better than other and what are the benefits of choosing the auto investment mode in a start of the month.
When you invest at the end of the month manually it is very intuitive and sounds comfortable to most of the investors, but what we think or prefer is that investing in an auto node at the start of the month is much better and beneficial for an average investor. Check out the benefits of investing on auto mode at the starting of each month.
Benefit #1 – You will be able to manage lack of discipline
Do you trust yourself in investing each month manually for next 5-10 yrs??
For instance, if you decide to invest Rs 10000 every 25th of them every month for next 10 yrs, are you sure you will be able to do it consistently for next 120 months.
But believe me readers it's very hard to act in a robotic era. There are various clauses that will come in your way like:
· Sometimes you will postpone it
· You will make it to the next week
· You will skip it for other expenses
· Sometimes you will make it
· And most important you will forget it sometimes
Now compare it with an auto mode where you have setup your SIP ( automatic monthly deduction in mutual funds) or a recurring deposit ( for those who think that mutual funds are not their part) and the money automatically gets debited from your account ( but you need to have the balance) and then gets invested without your intervention. I hope you will be able to find out which options suits you better.
Benefit #2 – You avoid unwanted expenses- You must have heard the basic principle of Economics that “Supply creates its own demand"- If you have money lying available in your bank account, you will get enough reasons to get to spend over it. So if you think to spend it first and then invest it at the end of the month, so it is guaranteed that you will not find any money left with you unless your income is more than your expenses. This is the case where you should make a structure that takes away some part of your salary from your saving bank account to somewhere else where you can't see easily.
Benefit # 3- It develops the habit of saving
One of the challenges for new investors is to develop the habit of saving in them. We spend money on things you don't really need like mobile, gadgets, travelling and consuming various things. So if you invest the money in the start of the month the rest of your expenses can occur accordingly.