Automate the whole investing process. It is easy to do and will not test your willpower month after month.
If you're like most people, you probably have some financial goals that you want to achieve. Maybe you want to save for a vacation, a down payment, or retirement. Maybe you want to payoff debt, build an emergency fund, or invest for the future. You have created your SMART financial goal plan. But month after month, you find that you are not saving as much as you would like. Something or the other falls through the cracks. This is where the benefits of automating your investing come to play.
Automating your investing means setting up regular transfers from your bank account to your investment account. You can choose how much you want to invest, how often, and where to invest. You can also adjust these anytime you want. Automating your finances means you are not tempted to spend your money on something else. Also, this is one of the best ways to grow your wealth automatically without lifting a finger.
Taking into account your goals, risk tolerance, and time horizon, setup a system that automatically invests your savings each month. Thus, you are now able to save time, reduce stress, and avoid emotional decisions.
There are many benefits of automating your investing. Let us see some of the important ones:
- It ensuresthat you regularly invest, regardless of market conditions. It can help reduce the impact of market fluctuations.
- Automating your investing helps avoid your personal bias, and reacting to bad news. Your investments decisions are no longer dependent on the frailties of the human nature. You just avoided common but costly mistakes that deal with market fluctuations, timing the market, or missing out on opportunities. All you need is to invest consistently.
- It saves you time and effort in the long run. You don't have to log in to your account every month and manually make a transaction. You just set it and forget it.
- It helps you build good financial habits. You don't have to rely on your willpower or motivation to save and invest. In a way, you just made it a part of your routine without having to lift a finger every month. All you need to do is make sure your budget works.
- By investing a fixed amount at regular intervals, you can take advantage of dollar cost averaging. That means you are buying more shares when prices are low and fewer when prices are high.
- Consistently investing leads to compounding of your money.Returns on your investments start earning returns themselves. This can significantly increase your wealth over the long term.
- Earlier we talked about making sure your budget works. Automated investing can also help with budgeting, as it forces you to set aside a certain amount for investments regularly.
- You can diversify your portfolio and reduce your exposure to market volatility.
- You can focus on your long-term goals and not get distracted by short-term noise.
- Lastly, it gives you peace of mind. You don't have to stress about your money or your future. You know you are doing the right thing and building wealth for yourself and your loved ones.
Automating is easier than you think. Here are the steps you need to follow:
1. Choose an investment platform. There are many options available, depending on your preferences, goals, and risk tolerance. You can use a robo-advisor, an online broker, or a micro-investing app. You can also invest in different types of assets, such as stocks, bonds, ETFs, or mutual funds. Depending on the platform that you choose, you can select from a range of pre-made portfolios or the selected platform will create a personalized portfolio for you based on your risk profile and goals.
2. Set up a transfer schedule. Decide how much you want to invest per month, and how often you want to transfer the money. For example, you can invest $100 every week, or $500 every month. You can also choose the date and time of the transfer, such as the first day of the month, or the day after you get paid.
3. Sit back and relax. That's it. You don't have to do anything else. Just watch your money grow over time and enjoy the fruits of your labor.
Remember, while automating your investments can be useful, it’s still important to review your investment strategy periodically to ensure that it aligns with your financial goals and risk tolerance.
That's it! You're now ready to automate your investing and watch your money grow over time.
