Contractual Plan

Contractual plan

A plan in which fixed dollar amounts of mutual fund shares are purchased through periodic investments, usually featuring some sort of additional incentive for the fixed period payments.

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Voluntary Accumulation Plan

An investment strategy in which shareholders of a mutual fund to buy more and more shares in the fund on a regular basis. It especially refers to situations in which a shareholder puts in a fixed amount of money on a regular basis, regardless of how many shares that amount buys. Generally speaking, this lowers the average price one pays per share. Thus, if one buys using a voluntary accumulation plan and later sells all shares at once, this could result in a higher profit. It is also called a contractual plan.

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contractual plan

A program in which an investor in a mutual fund agrees to invest a fixed amount of money at regular intervals in accumulating shares. For example, an individual may contract to invest $100 per month with a selected fund regardless of what the market does or at what price the fund's shares sell throughout the period. See also dollar-cost averaging, load spread option.