The benefits of Regular Savings Plans.

A regular savings plan (RSP) is not simply the concept of putting money into a savings account on a regular basis - rather, an RSP is a structured investment tool which can help you reach multiple long-term savings goals.

For example, you might have goals such as

• Buying a home

• University or education funds for your children

• Retirement funds

A formal regular savings plan is a good option for people who are new to investing, as the risks are spread out over a longer investment period making them relatively stable.

An RSP could be a great option for you if you want to make disciplined, consistent contributions to your long term investments, can accept some risk in order to grow your savings, and are willing to wait at least 5 years in order to reap the benefits of your investments.

Like other fixed term investments, however, there are some limits to how and when you can withdraw money from your RSP so if you are not willing or able to be locked into a savings plan or think you will need to withdraw your funds in less than 5 years, this might not be the solution for you.

How does an RSP work?

A regular savings plan allows you to buy a fixed value (for example, 2000 sek) of a nominated fund on the same date each month.

As the value is fixed, you will buy fewer units when the price of the fund is high and more when the price is low, which results in an average cost over a longer period of time.

Especially for new investors, it avoids the risk of reacting emotionally to the stock market, pursuing rises and falls in market value and engaging in higher-risk behaviour.

The value of an RSP benefits not only from the value of the fund, but also from compounding interest as all profits generated within the RSP are re-invested in the next purchasing round.