What is a recurring investment?

A recurring investment is a tool for investors to make regular and automatic investments. With a recurring investment, investors choose what to invest in, how much, and how often they want to invest. Market orders are placed automatically according to the schedule.

Why do investors use recurring investments?

• Saving time and energy

With recurring investments, investors do not have to continuously place buy orders for the same asset manually. The recurring investment will occur automatically based on an interval of your choosing. In addition, if they choose to pay by bank account, cash transfers will be initiated automatically.

• Dollar-cost averaging

Compared with investing a significant amount in an asset at one price, investing over a period at different prices with smaller amounts could help to average the costs down.

For example, both investors A and B invested $800 in Stock XYZ eight months ago. Investor A invested the total sum when the stock was trading at $10, holding 80 shares. In contrast, investor B made a monthly recurring investment schedule, investing $100 each month.

Eight months later, he holds about 98 shares, at an average cost per share of $8.16. Now Stock XYZ is trading at $10. Investor A achieves a gain of $0. Investor B, however, has gained about $180, a return of more than 20%.

What are the risks of a recurring investment?

• Uncertain filling price

Once a schedule is made, market orders are placed automatically whether the asset price is high or low. Investors could end up buying an asset at an unexpected price.

• Unsuccessful order placement

If you don’t have enough settled cash in your cash/IRA account, or the order will lead to a margin call in your account, your order will not be placed.‌

What should you know before you start?

*Make sure your Webull app is updated to V8.0 or above.

1. Recurring investments are available for cash, margin, and IRA accounts.
2. You can make a recurring investment schedule for all stocks/ETFs that support fractional shares trading (inverse, leveraged, or volatility ETFs are not supported).
3. Stocks/ETFs will be purchased with settled cash in cash/IRA accounts and with cash balance in margin accounts.
4. The minimum amount set in each schedule is $5 and the maximum amount is $25,000.
5. You can only make one recurring investment schedule for each asset. A total of 5 recurring investment schedules are allowed for each account.
6. Each schedule can only be modified once a day. If you choose to pay through bank account, you can only modify the investment amount, not the frequency of the schedule.
7. Orders are placed automatically at about 1:30 pm ET on regular trading days. If the market closes earlier, orders are placed at 10:30 am ET. For non-trading days, orders will be placed on the following business day around 1:30 pm ET.

Finally, learn how to schedule a recurring investment!