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A relaxed investor sets a pre-authorized contribution to automate their investments.

Psst… There's an Easy Way to Make Saving and Investing a Regular Habit

Written by The Inspired Investor Team | Published on May 19, 2023

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When a plane is on autopilot, it's not exactly flying itself — it's set to maintain a course or altitude while the pilot concentrates on other details of operating the aircraft.

The same idea can apply to saving or investing. When you set up pre-authorized automatic deposits from your bank account into an investment account on a set schedule, you're applying a "set it and forget it" strategy to your finances. Much like the plane's pilot, this allows you to spend time monitoring and working toward your goals with minimal ongoing effort, leaving you the time and energy to focus on other things.

A pre-authorized contribution plan, sometimes referred to as a PAC, is an automatic contribution to an account of your choice — typically your Registered Retirement Savings Plan (RRSP), Tax-Free Savings Account (TFSA), Registered Education Savings Plan (RESP), First Home Savings Account (FHSA) and/or another investment account. The contribution generally comes from your chequing or savings account and, once set up, the funds are transferred without any additional effort by you.

What are the benefits of a PAC? You can:

1. Take control and free up time

Everything about a PAC is within your control, from the frequency of your contributions (you can opt for weekly, every two weeks, twice a month, monthly or quarterly) to the amount you contribute (you can decrease it or increase it at any time). You can also stop and restart a PAC as needed, eliminating any concern about getting “locked in" to a plan. Stress- and effort-free saving is a massive benefit to setting up a PAC. Let's face it, it can be easy to forget to tackle savings each time a paycheque hits our account. A PAC is like a personal savings assistant who helps keep you on top of your goals.

2. Reach your goals faster

Perhaps the most compelling upside of a PAC is the ability to help reach your savings goals faster. Building your savings through regular contributions means you earn money on your initial investment AND on the money you've made on your earnings – thanks to the power of compounding. This is the case regardless of how big or small your regular contribution is.

3. Reduce your risk

PACs are also a way to take advantage of dollar-cost averaging (DCA), a simple investing strategy that can help you reduce the risk that comes with trying to time the market. By putting a fixed dollar amount toward your investment fund on a regular basis (say, $25 month), you may pay more for investments some months (when markets are up) and less during others (when markets are down), but overall, the total cost will typically end up being less than if you contributed in one lump sum.

Financial professionals often say most people spend their money in this order: bills, fun, saving. A PAC can help you prioritize savings while still keeping aside some discretionary funds for the "fun" part.

4. Reduce fees1

A PAC helps you grow your savings AND there's a bonus. With just $25 a week or $100 a month, you also get your quarterly maintenance fee waived.

PACs in action

Want to see a PAC in action? Try this Pre-Authorized Contribution calculator to see how saving regularly can help you reach your goals. You can calculate how your savings could grow with regular contributions, or how much you need to save in order to reach a goal.

There's a good reason we're often told to "pay yourself first." It's a golden rule of savings for one reason: it works. Paying yourself first can make saving like a reflex, as automatic as breathing. And who wouldn't breathe a whole lot easier knowing there's a nest egg building for your goals?

Looking to set up a PAC at RBC Direct Investing? Click Pre-Authorized Contributions or log in and head to Transfers under Trade & Transfer.

RBC Direct Investing Inc. and Royal Bank of Canada are separate corporate entities which are affiliated. RBC Direct Investing Inc. is a wholly owned subsidiary of Royal Bank of Canada and is a Member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund. Royal Bank of Canada and certain of its issuers are related to RBC Direct Investing Inc. RBC Direct Investing Inc. does not provide investment advice or recommendations regarding the purchase or sale of any securities. Investors are responsible for their own investment decisions. RBC Direct Investing is a business name used by RBC Direct Investing Inc. ® / ™ Trademark(s) of Royal Bank of Canada. RBC and Royal Bank are registered trademarks of Royal Bank of Canada. Used under licence.
© Royal Bank of Canada 2023.

1 There is no quarterly maintenance fee charged if your combined assets are $15,000 or more across all of your RBC Direct Investing accounts. If your combined assets are le ss than $15,000 across all of your RBC Direct Investing accounts, you will be charged one maintenance fee of $25 per quarter (split across all of your accounts). For full details please refer to the complete Commissions and Fees Schedule at

Any information, opinions or views provided in this document, including hyperlinks to the RBC Direct Investing Inc. website or the websites of its affiliates or third parties, are for your general information only, and are not intended to provide legal, investment, financial, accounting, tax or other professional advice. While information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by RBC Direct Investing Inc. or its affiliates. You should consult with your advisor before taking any action based upon the information contained in this document.

Furthermore, the products, services and securities referred to in this publication are only available in Canada and other jurisdictions where they may be legally offered for sale. If you are not currently a resident of Canada, you should not access the information available on the RBC Direct Investing Inc. website.

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