The benefits of automatic transactions

Automatic investments

Key benefits of making automatic investments:

  • Establishes a dollar-cost averaging strategy for investing in your American Funds
  • Builds your shares and helps you better manage your investment tax strategy
  • “Pays you first” and helps you invest more over the long term

American Funds can automatically invest a specified dollar amount on a recurring basis in one or more of the funds in your account. For example, you might want to set up two $200 automatic investments into AMCAP Fund® and EuroPacific Growth Fund® that would occur on the 1st of every month of the year. In that case, on the 1st of each month (January, February, March, etc.), $400 would be deducted from your bank account and would be used to buy $200 worth of shares each in AMCAP Fund and EuroPacific Growth Fund.

Automatic withdrawals

Key benefits of making automatic withdrawals:

  • Provides a convenient way to manage regular withdrawals over a period of time
  • Could help establish an income stream to help fund certain living expenses
  • Could satisfy required minimum distribution (RMD) rules for your retirement account

American Funds can automatically withdraw a specified dollar amount on a recurring basis from one or more of the funds in your account. For example, you might want to set up a $200 automatic withdrawal from AMCAP Fund that would occur on the 15th of every other month of the year. In that case, on the 15th of January, March, May, July, September and November, $200 from AMCAP Fund would be deposited directly into your bank account (as long as there are sufficient funds). You may also choose to have a check mailed to your address.

Automatic exchanges

Key benefits of making automatic exchanges:

  • Offers an easy way to invest money from a money market account on a regular basis
  • Provides a way to move money from one fund in your account to the same class of shares in another fund without any change in ownership
  • Moves money from one fund to another fund, from one fund to many funds, or from many funds to one fund

American Funds can automatically move a specified amount of money from one fund in your account to another fund. For example, you could move $300 from American Funds U.S. Government Money Market Fund℠ to The New Economy Fund® on the 25th day of every quarter of the year (e.g., January 25th, April 25th, July 25th and October 25th). In this case, shares worth $300 would be sold from American Funds U.S. Government Money Market Fund and used to buy $300 worth of shares in The New Economy Fund every 25th day of the first month in the quarterly period.

Automatic rebalances

Key benefits of using automatic rebalance:

  • Provides an easy way to maintain your desired asset allocation over time
  • Keeps your portfolio better aligned with your investment goals
  • Allows you to import previously saved target allocations

American Funds can automatically adjust your portfolio’s asset mix on a regular basis. Your portfolio’s asset mix may change over time as your investments grow at different rates through market ups and downs. You can use an automatic rebalance to maintain your portfolio’s desired asset allocation on a quarterly, semi-annual or annual basis. In that case, if the percentage of assets you want allocated to a fund grows or declines by more than 5% in a given quarter, an automatic rebalance will readjust the allocation for the entire portfolio back to your previously specified allocation. For example, if the assets you had allocated to Washington Mutual Investors Fund℠ grew from 25% to 33% of the overall portfolio, a quarterly automatic rebalance would exchange shares between the funds in your portfolio until the allocation of assets in Washington Mutual Investors Fund returned to 25%.

Set up an automatic transaction online

If you and your financial professional decide that an automatic transaction makes sense, you can get one started online.
  1. Log in to your account.
  2. On the right-hand side of Your Portfolio, click on the view link below Automatic Transactions.
  3. Click on the + Add New button for the type of automatic plan you’d like to establish.

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Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.

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This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.