I’ve had serious headaches with Monthly Stock Investment Plans for the few months I’ve used it, for the following reasons:
- Odd board lots means it takes a lot of time to process the trade, meaning you might miss great opportunities due to timing
- Odd board lots forces you to sell at market orders, thus having to sell at unfavorable prices that could’ve been prevented through price-limit orders
- Depending on your broker, it’s annoying as hell to cancel. I can start one with ease online, but have to physically queue in line to cancel.
- Depending on your broker, they are horrible for tracking how much stock you bought at what price if you get sent paper statements of such trades while your non-Monthly Stock Investment Plan trades can be accessed through e-statements
All of these cons do not compensate the only pro I see with Monthly Stock Investment Plans, which is commissions are excluded when purchasing through Monthly Stock Investment Plans for my broker. The only other pro I can think of is that it automatically “pays yourself first“, but I’m quite disciplined with allocating my monthly income, so this pro is of no use to me.
If these reasons aren’t enough to convince people to stay the heck away from Monthly Stock Investment Plans, I don’t know what will.
Not advice. No offer. Do not rely. May lose value. Risky. Conflicts hidden/obscured. (Borrowed from Terrence Yang‘s Disclaimer on Quora)