Periodic Contributions to Funds: What are they and what do they offer?

If you want to get more out of your savings, one way to do it is by doing periodic contributions to an investment fund. This means that instead of investing an amount of money all at once, you will be contributing new amounts every month to subscribe more shares.

What do periodic contributions offer?

As opposed to a one-off contribution, periodic contributions to investment funds offer us:

  • Flexibility: as an inversor you decide what amount are you going to contribute each month to your investment fund, a contribution that you can automate and you can also temporarily suspend, extend or reduce according to your circumstances. However small this amount is, you will establish a saving habit.
  • Liquidity: by making periodic contributions you do not have to deposit all your savings at once in the investment fund, so you may continue counting on them for whatever you want or whenever you need them.
  • Diversification of market risk: by making monthly contributions, the ups ans downs of the market will affect you less.
  • Savings planning: through periodic contributions to an investment fund you will be able to better plan your saving goals and long-term investments, with a view, for example to your retirement, without compromising your current financial stability. If you set realistic goals and do so early enough, the return you will have to demand from your investments will be lower, and therefore, more feasible to achieve.

In addition, by investing in mutual funds through periodic contributions in most cases, you will be able to access your money at any time you need, by reimbursing (selling) your shares. Similarly, taxation is another positive aspect of the funds, since until you sell (reimburse) the shares you will not pay taxes, provided that you are a natural person residing in Spain.