Best automatic investment plans

Brokers For Automatic Investment Plans in 2022


See which online brokerages are best for automatic investment plans (monthly/weekly AIP, dollar cost averaging) for stocks, ETFs, and mutual funds.



Best Brokerage For Automatic Investment


Investors at TD Ameritrade can take advantage of a convenient automatic investing plan (AIP), which is free of charge. TD Ameritrade allows any type of mutual fund to be registered for automatic purchases. Both load and no-load funds, and both transaction-fee and no-transaction-fee funds can be enrolled. Over 13,000 mutual funds are available on the TD Ameritrade of which 4,200 are commission-free.


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List of Brokers Offering Automatic Investment


Brokerage Rating Automatic Invest. Plan Details
New Account Promotion
Ally Invest
Ally Invest rating

NoNA Up to $3,000 cash bonus + $0 commission trades.
TD Ameritrade
TD Ameritrade rating

YesLearn more »$0 commissions + transfer fee reimbursement.
Charles Schwab
Charles Schwab rating

YesLearn more »None
Etrade
Etrade rating

YesLearn more » Get zero commission on stock and ETF trades.
Fidelity
Fidelity Investments rating

YesLearn more »None
Firstrade
Firstrade rating

YesLearn more »Get 2 FREE stocks and $0 commission in ALL trades!
Interactive Brokers
Interactive Brokers rating

NoLearn more »Use this referral link to get up to $1,000 of IBKR stock for free!
JP Morgan
J.P. Morgan Chase Brokerage Rating

YesLearn more » Get up to $625 when you fund a J.P. Morgan Self-Directed Investing account.
M1 Finance
M1  rating

YesLearn more » Up to $500 cash bonus for funding account at M1 Finance.
Merrill Edge
Merrill Edge rating

YesLearn more »Get up to $600 when you open a new Merrill Edge account with at least $20,000.
Public
4-star brokerage rating

YesLearn more » Get a FREE stock and $0 commission stocks/ETFs/partial shares.
Robinhood
Robinhood Trading rating

YesLearn more »Get one FREE stock when you open an account.
Sofi Invest
Sofi Invest rating

YesLearn more » 0% SoFi management fees. Plus, unlimited access to financial planners.
Stash
Stash Invest rating

YesLearn more » Get $20 bonus stock with this referral link.
TastyWorks
TastyWorks rating

NoNA $0 commissions + $75 for each friend referred with this referral code.
TradeStation
Tradestation rating

NoNA $150 cash bonus when you transfer funds into TradeStation.
Vanguard
Vanguard rating

YesLearn more »None
WeBull
WeBull rating

YesLearn more » 6 FREE stocks valued $34-$12,600 give-away at Webull.
WellsTrade
Wellstrade rating

YesLearn more »None
Zackstrade
ZacksTrade rating

NoNA Get as low as 3.56% margin rate + $150 ACAT fee refund.


Large Brokers Offering Automatic Investment Plans


You just finished your due diligence and identified a great stock or ETF that you want to add to your portfolio, but you pull up a chart and notice that it’s well into an uptrend and near recent highs. You remind yourself that all the fundamentals and valuation metrics checked out and so you try not to let the relatively high prices spook you. But the voice in the back of your head persists, “What if I’m buying at the top? Or what if I wait and it keeps going up?” Automatic investment plans (AIP) can help put your mind at ease.


What is an Automatic Investment Plan?


Like the name implies, an Automatic Investment Plan lets you setup a pre-defined investment schedule where you invest a fixed amount of money in a stock or portfolio of stocks at some recurring frequency (weekly, monthly, etc.) instead of buying your entire position in a single transaction. It’s essentially dollar-cost averaging. The benefit of this approach to long-term investing is that your cost basis is an average of the stock’s recent price levels and is not subject to the timing risk that’s inherent in picking a single price to buy your entire position.


A Simple Example


Let’s say I want to buy 100 shares of XYZ stock. Without dollar-cost averaging I would buy all 100 shares at the current price of say $10/share, which would therefore also be my total cost basis. With dollar-cost averaging I decide I will build my $1,000 position in four separate buys over the next four months by buying $250 worth of XYZ stock on the last day of each month. In this approach, my cost basis would be equal to the average price per share over these four month-ends.


Best brokerage for automatic investment


What Are the Benefits of AIP?


The primary benefit of an AIP is that it alleviates you from the burden and risk of trying to time the market (and hating yourself and making your portfolio suffer if you time it poorly). In the above example, if XYZ stock falls for the next four months you will undoubtedly lose money in both approaches, but you would lose less with dollar-cost averaging because each month that you added to your position, you did so at a better price.

Of course the opposite is also true that if the stock rallied for the next four months you would make more money by putting all $1,000 in at once instead of using dollar-cost averaging. This is because an AIP reduces the impact of price volatility on your overall cost basis, and it therefore results in less volatile returns, both positive and negative. This means that dollar-cost averaging gives you smaller positive returns during rallies but also smaller negative returns during downtrends.


A Real Life Example – Your 401(k)


If, like most people, you work a 9-5 salaried job, then chances are your employer offers you the opportunity to invest in a 401(k), or other type of retirement plan. If you elect to contribute a portion of your weekly paycheck into this retirement plan then you’re already realizing the benefits of dollar-cost averaging, as this is just another example of an AIP. Every week your employer automatically takes X% of your paycheck and invests it in the mutual fund(s) you selected, resulting in hundreds of small purchases over the life of your plan that each by themselves only have a small impact on your overall cost basis.


Best Automatic Investment Plans Summary


If you are confident in your abilities in timing the market and identifying peaks and troughs (perhaps many traders would fall into this category) then you might have good reason not to use an AIP. But if timing the market isn’t your specialty and trying to do so causes you more stress than it’s worth, you should consider using an AIP. They are easy enough to implement on your own through your broker, but even easier if you use a broker that offers this as an embedded service.


Disclaimer


INVESTMENT AND INSURANCE PRODUCTS ARE: NOT A DEPOSIT • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE

About the Author
Chad Morris is a financial writer with more than 20 years experience as both an English teacher and an avid trader. When he isn’t writing expert content for Brokerage-Review.com, Chad can usually be found managing his portfolio or building a new home computer.