Going on Autopilot

Physician's Money Digest, September30 2004, Volume 11, Issue 18


The path to wealth is relatively simple,some financial advisors say. Justbuy a mutual fund that takes a setamount out of your checking accountautomatically every month and then sitback and let the cash pile up. So why doso few people do it? According to somebig fund managers, only a small fractionof shareholders have an automaticinvestment plan in place. Many marketpsychologists think the issue at work iscontrol. Investors don't like the idea ofcommitting to a fixed monthly amount;they would rather invest a lump sum,which, unfortunately, they don't oftenget around to doing. Designatethe fund money for a specific purpose,such as college expenses. Studiesshow that investors who do that aremore likely to choose an automaticinvestment option.