How to Automate Your Investments and Savings

Investing is a useful way to multiply your savings. However, not everyone knows how to include investment in their financial planning. We're here to spotlight how investment services and automation can put your savings skills to work, generating more money through returns without the need to make specific investment decisions.

Automating your investments is a powerful strategy for achieving financial goals with minimal effort. This guide explores the benefits and methods of automating your investment process, empowering you to build wealth consistently and efficiently.

Setting Financial Goals

Many people automate their investments to achieve specific financial goals. You may be saving up to buy a home, securing a good retirement, or building your emergency fund. 

If your financial goals are on a timeline, align your investment strategy with your objectives and time horizons.

Choosing the Right Investment Accounts

Which type of investment account is ideal for your goals? Many retirement plans have automated investment built in. However, you can also select a savings account design for investment to achieve non-retirement financial goals.

 

Retirement Accounts with Automated Investment

When planning for retirement, you can choose from a variety of investment account types. These include:

• Employer-sponsored retirement plans: Your employer provides an investment-based retirement plan in which your contributions may be matched by your employer. Your employer decides which investment algorithm is used.
• 401(k)s: A 401(k) investment account comes with a selection of investment options or account settings. Then you can invest with pre-tax income and earn returns on your investments over time.
• IRA: Individual Retirement Accounts (IRAs) can be set up in many different ways, including investment automation to earn more than interest on what you save.

Setting Up Automatic Contributions

Automatic contributions to an investment account are like automating your savings. You can select a specific contribution amount and frequency to automatically transfer this amount from your checking account. This can allow you to dedicate a set amount of your monthly income to growing your investments without needing to interact directly with your investment platform or make individual decisions.

The best way to do this is to start with small contributions. Then, gradually increase over time as you become more confident with your strategy. Eventually, you can align your contributions and investment outlook with your financial goals for income growth.

Employment: Automatic Investment in Retirement

The single most common type of automatic contribution is through your employer. If your job offers an investment type retirement account, you can have them take a portion of your paycheck and invest is pre-tax as part of your compensation cycle. This way, you invest a set amount with every paycheck and that amount is removed from your income tax burden because it will become part of your income later after the retirement account is activated.

Many companies today automatically contribute to a retirement plan unless the employee proactively opts out. 

Automate Direct Deposit to an IRA

Alternatively (or in addition to employer plan contributions) you can open a private IRA (individual retirement account) which uses investment to grow your savings. Then you can automate contributions with direct deposits from your checking account. This allows you to remain in complete control and to adjust your automated investment amount and schedule over time.

Managing Automatic Reinvestments

One of the best things about an automated investment fund is that your earnings from dividends and capital gains can be re-invested to keep growing your returns. This is known as automatic reinvesting.

Automatic reinvestment enhances compound growth to contribute to the long-term growth of your investment portfolios. It allows your earnings to become part of the invested principle for the next growth cycle.

Regularly Reviewing and Adjusting Your Portfolio

Of course, no strategy remains perfect forever. You will get the best results by periodically reviewing your investment portfolio and automated strategy to ensure it is still aligned with your financial goals and risk tolerance. 

You might consider rebalancing your portfolios or updating your automatic contribution amounts. You can run your strategy past new and more advanced robo-advisors or adapt your contributions as your financial prospects and goals evolve over time.

Explore Automated Investment

Investing has many benefits, and with modern automation, you don't need to make individual decisions to secure steady dividends from your investment decisions. With today's investment platforms and account plans, it is possible to develop a long-term investment strategy with minimal stress, effort, or market analysis on your part.

Now is a great time to leverage the power of automation to build wealth and secure your financial future.