- Periodic Payment Plan
- A type of investment plan, often sold to military personnel, that allows an investor to accumulate shares of a mutual fund indirectly by contributing a small, fixed sum over a period of usually 10, 15, or 25 years. In exchange for these payments, the investor owns an interest in a plan trust, which invests in a mutual fund. The plan trust's sponsor makes money by charging a "creation and sales charge", also known as a "front-end load", to investors. This sales charge is as high as 50% of the first 12 months' worth of payments, making periodic payment plans a potentially expensive investment option, especially for investors who do not remain invested for the full length of the plan.
Most periodic payment plans also have an annual fee and small monthly custodial fees. As a result of these fees, investors may be able to get a better deal by purchasing mutual fund shares directly. While the low required monthly contribution may be a selling point of a periodic payment plan, some brokerage companies, whose fees may be lower than that of a periodic payment plan, will allow investors to make small monthly investments and avoid large minimum investments if they establish automatic deposits.
Also known as a "contractual plan" or "systematic investment plan".
Investment dictionary. Academic. 2012.
Look at other dictionaries:
periodic payment plan — accumulation of capital in a mutual fund by making regular payments on a monthly or quarterly basis. Bloomberg Financial Dictionary … Financial and business terms
Periodic Payment Plan Certificate — A certificate representing ownership interest in a periodic payment plan. Through section 27 of the Investment Company Act of 1940, the Securities and Exchange Commission regulates the investment companies that sell periodic payment plan… … Investment dictionary
Substantially Equal Periodic Payment - SEPP — A plan that allows individuals who have invested in an IRA or another qualified retirement plan to withdraw funds prior to the age of 59.5 and avoid income tax and early withdrawal penalties. Typically, an individual who removes assets from a… … Investment dictionary
periodic payments — A series of payments from an annuity, qualified retirement plan, or 403( b)(7) account made over a certain term of years. A payment from an IRA, even if over a period of years, is not considered a periodic payment for tax purposes. Bloomberg… … Financial and business terms
international payment and exchange — ▪ economics Introduction international exchange also called foreign exchange respectively, any payment made by one country to another and the market in which national currencies are bought and sold by those who require them for such… … Universalium
Defined benefit pension plan — For the defined contribution pension plan, see Defined Contribution Pension Plan. In economics, a defined benefit pension plan is a major type of pension plan in which an employer promises a specified monthly benefit on retirement that is… … Wikipedia
Withdrawal Plan — 1) A payment structure arranged with a mutual fund in which the investor receives a set amount of funds from the fund on a periodic basis. This is also called a systematic withdrawal plan . 2) Any strategy in which an investor liquidates a… … Investment dictionary
SEC Form N-27E-1 — A filing with the Securities and Exchange Commission (SEC) that must be used by issuers of periodic payment plans to inform holders of periodic payment plan certificates who have missed certain payments within 18 months of the issuance of the… … Investment dictionary
amortization — I noun clearance, defrayal, defrayment, disbursement, discharge, extinction of a debt, extinguishment of claim, liquidation of a debt, payment, remittance, satisfaction associated concepts: amortization contract, amortization of a mortgage,… … Law dictionary
SEC Form N-27F-1 — A filing with the Securities and Exchange Commission (SEC) that must be used by custodian banks for issuers of period plan payments to inform investors holding periodic payment plan certificates of the fees they will pay under the investment and… … Investment dictionary