Buy Funds Through a Broker That Offers Automatic Investing

If you're a fund investor who likes to automatically deposit a certain amount into your fund each month or quarter, check that your broker allows you to do this before choosing a broker.

Automatic investing lets you buy fund shares without thinking about it. After the first purchase into the fund, you set up a system of future injections, say $100 or $1,000 every month or quarter. Once you program in how much and when, money just flows from your bank or broker into the fund.

Automatic or "systematic" investing has multiple fans in the fund community. Fund families love it because, after signing up, shareholders mindlessly send assets their way. Investors like it because it keeps them disciplined, and some are attracted to the concept of dollar-cost averaging. The idea there is that by setting aside a dollar amount, rather than focusing on share price, investors end up buying more shares of a fund when the price is low and fewer when the price is high.

Most major fund companies have an automatic investing option, and plenty of shareholders take part. At American Century, for example, 21% of retail shareholders participate in the fund family's automatic investing plan, according to a spokesman.

Yet, while automatic investing is a fund staple, not all online brokers offer it. Among the seven biggest brokers, CSFBdirect, Datek and E*Trade don't have the feature, while Ameritrade, Fidelity, Schwab and Waterhouse do.

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