Here’s Your Set It and Forget It Investing Strategy

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If you really want to effectively compound your wealth, it’s essential to invest. But good news: Investing doesn’t have to be a huge time commitment, especially if you’re aiming to achieve long-term goals. If you invest wisely from the get-go, you can earn returns with very little maintenance.

To find out the best strategies for “set it and forget it” investing, I chatted with financial experts to get the inside scoop on low-maintenance investing.

The best way to engage a ‘set it and forget it’ strategy is through goals-based investing,” said Andy Schuler, CFA, investment managing director at PNC Wealth Management. “With that strategy, when you construct a portfolio, you don’t make choices simply based on your risk tolerance or expected returns. Rather, your decisions are predicated on how an asset — such as a stock or bond — will help you achieve short- and long-term financial goals.”

Here are six steps to employ a “set it and forget it” investment strategy:

1. Define Your Goals 

“This step is obvious but necessary,” he said. “A typical investor has multiple goals, such as retirement, funding their children’s college expenses or buying a vacation home. Ultimately, the combination of goals is unique to each investor, but goals-based investing gets prescriptive around those goals.”

In order to maximize your nest egg, make sure you have the best retirement account for your savings.

2. Ask the Tough Questions 

Before you set goals, make sure you’re being realistic.

“Some goals just might not be feasible, or you will have to pick and choose which goals to focus on,” said Schuler. “You’re better off knowing what you will have to do at the beginning, rather than down the road if you find your progress stalling.”

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He recommends starting by asking these questions about each of your goals:

  • How much will it cost? 
  • Do I have the resources to fund this goal? 
  • What is my timeline? 
  • How important is this goal to me? 
  • Is there a way to cut corners?

Counterpoint: The Dangers of a ‘Set It and Forget It’ Retirement Strategy

3. Determine What the Trade-Offs Will Be 

“No one has unlimited resources, so take a thorough look at your budget and spending habits,” said Schuler. “You may need to make sacrifices now to meet your goals later. Keep your eye on the prize and remember your long-term goals. For example, you might want to buy a nice car next year, but that might mean that your retirement goals need to be adjusted.”

4. Figure Out Your Risk Tolerance 

All investing comes with some amount of risk, so figure out how much risk you can handle before allocating your assets. And if you’re looking to make low-maintenance investments, “you should take on the least amount of risk necessary to fund your goals,” said Schuler.

5. Work With a Professional 

“Now that you know what your goals are and what you’re willing to give up to achieve them, it’s time to find a professional who can help get you across the finish line,” said Schuler. “Depending on your goal, you might need to work with multiple advisors to create a portfolio that’s designed with your objectives in mind.”

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Related: The Best Online Brokers for Beginners

6. Schedule Time to Check On Your Progress 

Even with a “set it and forget it” strategy, you’ll still want to monitor your investments from time to time to make sure you are tracking where you want to be to meet your goals.

“Your priorities, circumstances and time horizon can and will change,” he said. “By regularly returning to that original goal and checking in on how you’re doing, you can make adjustments as needed. For most people, an annual review will suffice, but depending on your time horizon and goal, the frequency might need to be different.”

As for which types of investments work best for a “set it and forget it” strategy, ETFs and index funds are both good options.

“A total stock market index fund is the best investment solution for a ‘set it and forget it’ investor,” said Paul Ruedi Jr., CFP, financial advisor at Ruedi Wealth Management in Plano, Texas. “Index funds are low cost and diversified, and since you only have to buy or sell one fund and never have to re-balance, managing your portfolio takes little to no effort. If you want both U.S. and international stocks in your portfolio, you can still do so in one fund by investing in something like the Vanguard Total World Stock ETF.”

See which Vanguard funds are best for retirement.

Gabrielle Olya contributed to the reporting for this article.

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