Automate Your Wealth: 10 Hacks for Effortless Saving and Investing
Written by
Cynthia Measom
Edited by
Amen Oyiboke
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If you haven’t made much progress in building your wealth because you think you’ll have to actively manage the processes, think again. Numerous options exist to help you save and invest effortlessly. That doesn’t mean you’ll never have to make changes or check in on your investments or savings balances.
Direct Deposit
“Have a portion of your paycheck directly deposited into your savings or investment accounts before you even see it in your checking account,” said Angela Ashley, founder and CEO of Unique Investment Advisors.
The expression, “Out of sight, out of mind,” applies here. If you don’t see the funds in your checking account each payday, you won’t miss them.
Set It and Forget It
Ashley recommended choosing a diversified portfolio of low-cost index funds or EFTs aligned with your risk tolerance and investment horizon. “Once set up, you can largely leave it alone, only revisiting it periodically to rebalance if necessary,” she said.
Index Investing
Ashley said that index-fund investing takes little ongoing effort. “You set it and let it cook,” she explained. “Not only are expenses typically lower, when compared to active funds, but the market timing risks/drawbacks aren’t present.”
Automate Bill Paying
“Automation reduces the time spent on redundant tasks like making bill payments,” said Ashley. “It is more accurate and reduces the possibility of human error, eliminating those pesky late fees and penalties.”
Fixed-rate bills, such as your mortgage or cable bill, are good picks for automated bill paying because the amounts don’t change. However, you’ll want to monitor bills that have fluctuating amounts, such as your credit card bills — especially if you don’t have them set to pay off monthly.
Automatic Contributions
Ashley recommended setting up automatic transfers from your checking account to your savings or investment accounts. “This way, a portion of your income is saved or invested without you having to think about it regularly,” she said.
Employer-Sponsored Retirement Plans
“If your employer offers a 401(k) or similar retirement plan, enroll in it and set up automatic contributions from your paycheck,” said Ashley. “Many employers also offer automatic contribution increases over time.”
Additionally, if your employer offers a 401(k) match — which means it matches your contributions up to the legal limit — you’ll want to ensure you contribute enough to qualify for the full match. Otherwise, it’s like leaving money on the table.
Target-Date Funds
“These mutual funds automatically adjust the asset allocation (mix of stocks, bonds, etc.) over time based on your target retirement date,” Ashley said. “You pick the fund with the date closest to when you plan to retire, and it handles the rest.”
Dividend Reinvestment Plans (DRIPs)
Ashley said that if you own dividend-paying stocks, you should enroll in a DRIP. “This automatically reinvests your dividends back into the same stocks, allowing you to compound your investments over time without manual intervention,” she explained.
Budgeting Apps
“Use budgeting apps like Mint or YNAB to automate tracking your expenses, saving, and investing,” said Ashley. “These apps can help you stick to your financial goals and save money without constant manual effort.”
Rebalance
Ashely explained that automatic rebalancing quarterly maintains your asset allocation goals, saving you time and effort. “It adapts to changing market conditions, captures gains, maintains diversification and mitigates risk,” she added.
Is Automating Your Finances a Good Idea?
Ashley is all for automating finances. “Any time you can take the redundancy out of financial processes and add convenience, it’s a good thing,” she said. “It is a massive time-saver, so you can focus on more enjoyable pursuits.”
Ashley said there are several wealth accumulation advantages if you use automation.
“The increased savings benefit from just simply utilizing automatic transfers to consistently build savings over time is a game changer,’ she explained. “It helps investors detach, so they are less likely to react impulsively to market volatility or news events.
“In retirement planning, our goal is to build wealth steadily over time while minimizing stress and emotions, leading to greater financial well-being and peace of mind. Automation is a valuable tool that helps us stay that course, achieve our goals and reach the all-important finish line.
“Setting up automatic transfers to savings or investment accounts ensures that money is consistently set aside, helping individuals build their savings over time.”
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