Automatic Investment Plan - AIP

  

It's hard for most people to plan for the long term. If she has money, the average Josie spends it. Even if she saves, that money is likely to get used eventually for something fun: vacations, new cars, lottery tickets, cases of Reese's Peanut Butter Cups. This typical spending pattern means bad news for retirement, since none of that peanut butter cup money is going away for investment.
An automatic investment plan circumvents this tendency, short-cutting people's natural instinct to spend everything they earn. The AIP automatically takes money out of a person's paycheck and puts it into a retirement account.
Basically, the deposit into the retirement account comes out like taxes or social security. It becomes just another withdrawal, and never becomes part of a person's take-home pay. This allows the retirement account to build up without a person having to make the conscious decision to save on a regular basis.

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