What is the Check-a-Month Plan? A Guide to Monthly Income Investing
Definition & Meaning
The check-a-month plan is an investment strategy designed for individuals who wish to receive regular monthly income from their investments in bonds. This method allows investors to invest a substantial amount of money in bonds, which automatically redeems a portion of the investment each month to generate a check for the investor. The total investment amount is divided into six equal parts, ensuring that interest is accrued and paid out monthly.
Legal Use & context
The check-a-month plan is primarily used in the context of investment and finance law. It is relevant for investors looking to create a steady income stream from their bond investments. This plan may involve various legal documents and forms related to investment agreements, which users can manage through resources like US Legal Forms. It is important for investors to understand the legal implications of their investment choices, including the terms of the bonds and any associated fees.
Real-world examples
Here are a couple of examples of abatement:
Example 1: An investor has $60,000 to invest in bonds. They choose a check-a-month plan, which divides the investment into six parts of $10,000 each. Each month, the plan automatically redeems enough shares to provide a monthly check based on the interest earned.
Example 2: A retiree uses a check-a-month plan to supplement their income. They invest $120,000 in bonds, receiving a consistent monthly payment that helps cover living expenses. (hypothetical example)