Investment Plans: what is the difference between PAC and PIC?
CAP is an abbreviation for the phrase Plan Of Drift, ie an investment plan in staggered payments basis , usually monthly or quarterly , but also annually.
A PIC is instead a Capital Investment Plan in which you make a lump sum payment of capital.
The choice between the two forms of investment obviously depends on the availability of the investor: there are those who, in an attempt to recoup the savings, can afford only small periodic payments. In addition, investments in instalments reduce risks. On the other hand, in the investments made in a lump sum in case of rising markets, the investment makes it a lot higher.
The profitability of a PIC or a PAC, without distinction, however, depends also on the characteristics of the underlying instrument on which you choose to invest. The most frequent choice is that of an ETF that replicates the performance of a particular stock index, in this case one must be aware of the fact that the indices of the U.S. stock market or German are less volatile than others, such as those of the Japanese stock market and that for the first the probability of obtaining after 20 years of investment less of the paid amount that is very low, while in the second case it is quite high.
For both mentioned instruments asset management must keep in mind the costs, expressed in figures by the TER (Total Expense Ratio): a 1 % fee involves expenditure that is already very high. On average, during this period the management fees for equity ETFs should be limited to 0.5% .