Firstrade Automatic Investment Plan and Dollar Cost Averaging
If you’re searching for a broker that supports automated investing and dollar-cost averaging, Firstrade could be a solid choice. Read on to see why.
Key Takeaways
• Firstrade’s automated investing only works for mutual funds, but investors have extensive control over amounts, schedules, and order types.
• You can create dollar-cost averaging plans, with the choice to reinvest dividends and capital gains.
• Automated deposits are supported, including an Instant Deposit feature that allows same-day investing.
• The broker’s fees remain competitive, and it offers a wide range of mutual funds.
Is Automated Investing Available at Firstrade?
Firstrade does have automated investing, but it only covers mutual funds. While this option isn’t available for stocks or ETFs, the mutual fund service is effective. Here’s how it works.
Firstrade clients can establish recurring investments for each mutual fund in their portfolio. This setup lets them personalize amounts, schedules, and order types. They can also use separate funding sources for different investments.
However, Firstrade doesn’t highlight this option on its website, so many customers might be unaware of it. To enroll in automated investing, you must complete a form located in the 'Form Center' under the 'Service' tab.
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Form Details
Once you have a mutual fund position, you can use Firstrade’s 'Mutual Fund Periodic Investment Plan Application' to schedule recurring buys. This form supports automated investing in one or more funds, with a limit of five funds per form.
The form is straightforward. You select the funds for your order, pick the purchase method (NAV, LOI, or ROA), enter the amount, and decide how often the investment takes place.
You can also specify the exact days or months for your investments, which is useful for dollar-cost averaging or seasonal investing methods.
Firstrade provides various funding methods for automated investing. You can link a bank account for recurring transfers or rely on your brokerage account balance.
Firstrade Dollar Cost Averaging
Automated investing is a handy way to employ dollar-cost averaging, and Firstrade has options that boost this method.
When you open a mutual fund, you can opt to reinvest dividends and capital gains in the same fund. Doing this supports dollar-cost averaging and generates a compounding effect, which may help your investments grow over time.
Firstrade Automated Deposits
Firstrade also has an automated deposit option, which is convenient if you want to use your brokerage account balance for mutual fund purchases.
To establish automated deposits, pick a deposit amount, schedule, and funding method (ACH, check, or wire) on the deposit screen.
Each deposit choice has its own processing period. For instance, ACH and checks can take up to five days to clear. Yet Firstrade’s Instant Deposit feature lets you skip this wait by providing a $1,000 credit on your first deposit, making same-day investing possible. Later deposits receive instant credit matching your account balance at the moment of transfer.
Is Firstrade Good for Automated Investing?
Firstrade can be an excellent option depending on your objectives. The broker charges competitive fees, offers a broad range of mutual funds, and has a dependable automated investing function.
However, Firstrade doesn’t provide robo-advisory services, portfolio rebalancing, or automated stock and ETF investing. If you need these tools, you might consider a different broker.
Updated on 2/4/2025.
I work in investment analytics and have been investing in the market since I was in high school. I enjoy anything that involves lots of strategy (i.e. a good game of chess), which is why I was naturally drawn to investing and researching companies. Outside of investing, I’m a big fan of the outdoors. In summer, you’re most likely to find me kayaking, camping, and hiking in the mountains.
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