Flexible investment plans allow investors to invest lump sums or regular amounts into a range of funds. They can offer a convenient way to get started with investing and manage your portfolio over time. However, they also have some drawbacks to consider. This article will analyze the pros and cons of using flexible investment plans.
Flexibility and convenience are major benefits
Flexible plans allow you to invest however much you want, whenever you want. You can make one-off lump sum investments or set up a regular monthly investment plan. The range of funds on offer also provides investors lots of choice to match their goals and risk tolerance.
Watch out for higher fees eating returns
While convenient, flexible plans can charge higher fees for the flexibility they provide. These ongoing fees can eat into long term returns if not carefully monitored. Investors should research fee structures before committing to any plan.
Flexibility needs discipline to prevent overtrading
Having the ability to frequently trade in and out of positions seems flexible and useful. However, this can encourage overtrading behavior which destroys returns. Discipline is required to use flexibility judiciously.
Range of funds aids portfolio construction
Flexible plans provide access to a wide range of asset classes, fund managers and geographies. This supports investors looking to construct a properly diversified portfolio aligned to their investment goals.
Consolidated reporting eases administration
Having all your investments in one place makes record keeping and tax reporting much easier compared to handling many separate accounts and statements.
Flexible investment plans provide convenient access to investing along with reporting benefits. However, investors need to watch out for higher fees and maintain discipline to not overtrade. Overall, used judiciously, flexible plans can support portfolio growth.