The Service:
Automatic Investment Plan allows you to save regularly and
automatically.
- You can pre-arrange to purchase your choice
of over
2,500 mutual funds
for your RBC Direct Investing RSP or Investment Account, paid for
from your chequing or savings account.
- You can pre-arrange to have cash contributions
transferred from your chequing or savings account into your RBC Direct Investing RSP.
- You can pre-arrange to purchase mutual
funds with cash already in your RBC Direct Investing RSP.
- Spousal or non-spousal contributions may
be made to a RBC Direct Investing RSP.
PLEASE NOTE: Minimum contribution is $100 monthly or $300
quarterly per mutual fund. Automatic Investment Plans
are not available for RESP accounts.
The Investment Strategy:
Arrange a regular, disciplined investment in mutual funds
and avoid the effects of market swings by taking advantage
of dollar cost averaging.
How Dollar Cost Averaging Works
Dollar cost averaging is a strategy where you invest a fixed
amount on a regular basis. Integrating this type of discipline
into your investment approach ensures continuous investing,
regardless of market performance.
Why it Makes Sense
With dollar cost averaging, you purchase more of your chosen
investment when the price is low and less when the price
is high. In a volatile market, you end up with a lower cost
per investment than with lump-sum investing. By committing
to regular investing, you can overcome the temptation to
base investment decisions on emotional reactions to market
activity.
In the example below, an investor purchases $500 of a stock
during each time period. The average price is $7.40, but
his average cost is only $7.00 ($2,500 divided by 357).
Time
Period
|
Amount
Invested
|
Price
|
Number
of Shares
|
Average
Cost
|
| 1 |
$500 |
$10.00 |
50 |
$10.00 |
| 2 |
$500 |
$8.00 |
62 |
$8.89 |
| 3 |
$500 |
$6.00 |
83 |
$7.69 |
| 4 |
$500 |
$5.00 |
100 |
$6.77 |
| 5 |
$500 |
$8.00 |
62 |
$7.00 |
| |
$2,500 |
$7.40 |
357 |
$7.00 |
NOTE: Commissions are not factored into the dollar cost
averaging grid
To enroll in the service, simply download the  Automatic Investment Plan form (available in pdf format) and forward it by mail or fax to:
RBC Direct Investing Inc.
Royal Bank Plaza
200 Bay Street, North Tower
P.O. Box 75
Toronto, Ontario M5J 2Z5
Fax: 1-888-722-2388
Alternatively, you may drop the form off at any RBC Direct
Investing Investor Centre or your local RBC Royal Bank branch.
Open
a RBC Direct Investing account now.
|
