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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Finance: What is a Keogh Plan?64 Views

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Finance allah shmoop What is a keogh plan Well basically

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it's an ira for self employed people and more or

00:10

less like have your own company your own llc Well

00:14

then you probably want to sock away some dough without

00:17

paying taxes today betting that you'll want to pay him

00:20

instead Tomorrow if ever knock on the door of keogh

00:24

plan central and you'll save your way to prosperity Sort

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of lungs You invest the money well in the market

00:30

Well basically the keio works just like an ira If

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you makes a hundred grand a year and you pay

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thirty five percent tax on that last ten grand that

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you make or thirty five hundred box well instead you

00:40

could put that ten grand into a keogh plan invested

00:44

for however many years until you're an old geezer Think

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seventeen and a half plus And hopefully that ten grand

00:50

grows a whole lot in an index fund or something

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like that Because the market doubles about every seven eight

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nine ten years something like that And then when you're

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not working i'ii earning ah whole lot less money Well

01:01

then you can start withdrawing that money from your keogh

01:05

Plan You pay something more like i don't know twenty

01:07

percent in taxes at that point because you're taking lesson

01:10

pay than you did when you were accumulating wealth like

01:13

that thirty five percent So while the fuss to save

01:16

just fifteen percent net difference in taxes at thirty five

01:20

minutes Twenty there Well it's not that much fuss A

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few forms you fill out of filing here and there

01:25

and well that's kind of it You go buy an

01:27

index fund and sit but more to the point it's

01:30

a day discipline That is when you have this wonderful

01:33

allure of saving taxes well for most people it's enough

01:36

of an incentive to actually save money rather than spend

01:40

it and that's a good thing to dio So you

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don't end up like this guy living in his suv 00:01:46.432 --> [endTime] you know down by the river

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