Contractual Plan is a mutual fund accumulation plan under which the investor agrees to contribute a fixed sum of money over time. If the investor does not complete or terminates the contract early, they may be subject to penalties.
An investor may elect to purchase mutual fund shares though a contractual plan when the investor can not meet the minimum investment required by the fund company. In cases where a mutual fund has a very high minimum investment a contractual plan will offer the investor the ability to invest in the fund over time through the plan.
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