One of the hardest parts about staying on top of your finances and investments is simply finding the time in the day to make sure your bills are paid, you’re saving money and you’re putting it to work for you consistently. But luckily, we live in a technology enabled world. And as a result, automating some of these recurring financial tasks is easier than ever.
So that’s why in this article I want to share why you should put your finances on autopilot from end-to-end in order to, in turn, put your investments on autopilot. And yes, while these tactics can take a little bit of upfront time investment to set up, they’re well worth the effort. Plus, as long as you stick with it for a few months you’re sure to see a huge ROI on your time.
This is a guest post written by Jay Delaworth from Intelligent Trend Follower.
3 Ways to Put Your Investments on Autopilot
To get started, let’s look at some practical tips you can use to automate your bill payments and savings, so that you can consistently have the cash to help put your investing plans on autopilot. Sound good?
If you want to automate your investments, well, you need to make sure the rest of your financial house is in order first!. After all, it’s not logical to make automatic contributions to an investment account if you have high-interest credit card bills piling up every month, right?
Instead, you need to walk before you can run. So for starters, make sure you have automatic bill payments set up that cover your recurring monthly expenses, like phone, internet, rent or mortgage and utilities. By putting these payments on some sort of pre-authorized card, whether from your bank account or credit card, you don’t have to worry about forgetting to pay them and being delinquent.
The great thing is, these days you can usually do this right from your bank’s mobile phone app. Worst case, you can easily set these kind of payment plans up through your online banking. But don’t stop there! Assuming you have a recurring paycheck coming in every few weeks, it’s pretty easy to start automating your savings as well.
2) Automate savings to fuel your investment accounts
Just like you can pre-schedule your bill payments to recur every month, so you can do with your savings. This is pretty much best practice in personal finance circles, so I apologize if it’s old news. But I think it bears repeating because just by getting out of your own way and setting up automatic contributions you can really start to pave the way to a comfortable retirement.
So commit to paying yourself first, and set up bill payments to send at least 10% of your income to your savings accounts as soon as that paycheck hits your account. And hopefully, depending on your income, lifestyle and frugality, you’ll be able to slowly increase your savings amount over time.
That way, before you know it, your investment accounts will be filling up with contributions. And just like with your bill payments, this should be pretty easy to do through an online bill payment. But don’t let it just sit there! Now it’s time to get your money working for you, to put your investments on autopilot. Let me show you a few ways you can make this easy, and put your future self on comfortable financial footing once and for all.
3) Automate investing decisions with index-based ETFs
We’re so lucky to live in a world where technology makes investing so easy. From the banking and brokerage apps on our smartphones, to low-cost portfolio management solutions that handle all of your asset allocation, tax-loss selling and portfolio re-balancing. So the good news is, if you can manage to consistently contribute to your savings accounts, growing your wealth has never been easier.
Seriously, thanks to low-cost financial products, ever-shrinking digital transaction fees and a seemingly never-ending wave of financial technology innovations you can now invest small amounts of money in really affordable ways, often right from your phone! What’s not to love about that?
In particular, there are many low-cost ETF investing strategies that you can use to automate your investments. This way, you can grow your wealth according to best practice in only a few minutes per months.
So here are a couple of ways you can easily put your investments on autopilot using ETFs:
- Use a robo-advisor (like Wealthsimple – In fact, get a free $50 for signing up!): These digital wealth managers are a great way to get started with automating your investments. Once you set up a profile and link it to your bank account, you can truly invest in an effortless way. If you’re not interested in investing and just want to grow your wealth as easy as possible, this is a great solution at a very reasonable cost.
- Set up your own diversified ETF portfolio: The great thing about low-cost buy-and-hold investing is that the best practices are widely-known. And you can easily build a highly-diversified portfolio with just a couple of ETFs. If you have more interest in managing your investments and keeping costs to an absolute minimum, this might be a good approach for you. And once you decide on your asset allocation you can continually allocate your savings to match your target each time you contribute new funds. With an online broker, this is a really-low cost option and doesn’t take long to get started.
- Get a financial advisor: If you’re looking for more of a human advisor, then a real-world financial advisor might be the best choice for you. This could also be the case if you have a more complex estate or are looking to optimize your tax bill. However, be careful of the associated fees when working with a financial advisor. While it might seem more expensive upfront, you may be best off to find a fee-only financial planner to set you up with an ETF investing roadmap that works for you. This way you get the professional help to automate your investments, but are less likely to get charged hidden mutual fund fees for decades to come.
Conclusion: Automate your finances from A-Z to put your investments on autopilot
Investing doesn’t have to be complicated. In fact, with today’s technology and online education, it can actually be easier than ever! So I hope this article helped open your eyes to some of the different approach you can take to removing the heavy lifting from snowballing your net worth.
And if there’s one takeaway I want you to remember from this article it would be to automate your finances from A to Z. Because if we’re not careful, life will get in the way and we can end up our own worst enemy. On the other hand, if you put systems in place to ensure you’re paying your bills, saving your money and putting your cash to work, your retirement plans will look better than ever!
Are you ready to put your investments on autopilot?
Want to learn more about Wealthsimple and the $50 offer? Check out the full write-up here. It’s no joke, I already invested and I’m loving their recommended funds. Be sure to check them out and make your investment today!
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.