Automated investing can be one of the smartest ways you can streamline your way to wealth building. You are less likely to miss money being transferred from your paycheck into your 401(k) or investment account by automating your contributions. From beginner to seasoned options trader, the strategy of automating investments does pay off in maximizing growth over the long term. This guide aims to lead you through some of the choices you can use to automate your investments, from reinvesting your dividends to setting up regular transfers into a robo-advisor account.
What is Auto-investing?
Automated investing helps overcome the common tendency to forget or delay our best intentions, such as New Year's resolutions that fade away by February. You're pre-programming yourself with automated investing to prioritize long-term financial goals.
This strategy suits those seeking to earn today's money to generate tomorrow's wealth. It is especially helpful when one is in a savings plan into retirement or for college savings for a child, general wealth-building, or any goal that will be five years plus.
And how it works: You start by choosing an account which one you want to draw investment funds from like paycheque, checking, or savings then you choose where you want to invest in, which may be workplace retirement account, self-directed brokerage account, micro-investing app, or robo-advisor. Reinvesting dividends and capital gains qualifies too as automated investing. After choosing the specific investment you have, you need to set up automatic transfers from the cash in your other account to your investment account.
Lastly, determine how much you want to invest and how often. Once set up, your money will automatically go into your chosen investments. Even if the market goes down, automated investing forces you to stay the course and adhere to one of the best investment principles there is: "Buy low.".
How Auto-investing works?
Think of automated investing like setting up automatic bill pay. You define the parameters, such as the amount you want to invest, the type of investments, and the source of funds. Once everything is set up, regular transfers are made from your bank account or paycheck directly to your investment accounts—automating your contributions without any additional effort.
If you have a self-directed account, you might need an extra step to manually invest the money once it’s transferred. However, this step can be avoided by investing in pre-built portfolios offered by your brokerage, which automatically allocate your funds according to a preset strategy.
Alternatively, you can fully automate your investment portfolio using a robo-advisor. With a robo-advisor, your contributions are automatically invested based on the portfolio allocations and rules you established during the account setup. This ensures that your funds are consistently managed and aligned with your long-term financial goals, without the need for ongoing manual oversight.
Why is Auto-investing a good idea?
Automated investing is a smart strategy for almost everyone regardless of their experience with money or their investment goals. Behavioral finance research shows that people typically find it tough to make rational financial decisions week after week. We want to invest regularly, but then life happens; we have some unexpected expenses, market fears, or we simply procrastinate, and then we miss opportunities to grow our wealth. It is at this point that automatic investing is what will be most valuable to you.
It eliminates the tendency to procrastinate on contributions, as well as completely missing investments. Most of the emotional decision-making can be eliminated since, with automated investing, a sum of money is automatically drawn out of your banking account into your investment account, usually without you even noticing that the money has been taken out. A disciplined approach means spending more time thinking in long rather than short terms.
For example, if you automate your investments, then literally you are paying yourself first. Not sitting down at the end of the month to see what you have before investing, money flows automatically toward building wealth assets. Constant investing will help you over time to take advantage of compound interest where your earnings make even more, thus enabling substantial growth in your investments.
More, the process does not even allow the possibility of committing emotional investment mistakes such as missing the market when it hits low prices. As it is on autopilot, you'll never be led to abandon your financial plan, even when the market fluctuations will want that. Actually, on autopilot investing is made possible through an automated investment in such a way that enables an investor to leverage one of the most universal principles that define successful investing: the purchasing low when markets dip. It is only wise that this disciplined, long-term approach yields the highest possible chances of meaningful success for you and allows you to build wealth over time steadily.
How does Compound Bonds’ auto-investing work?
Compound Bonds’ auto-investing feature simplifies the process of growing your savings by automating regular contributions. Once you set it up, a predetermined amount is automatically transferred from your bank account or paycheck into your Compound Bonds investment account at regular intervals. You can customize the amount and frequency of these transfers to fit your financial goals.
With auto-investing, your funds are consistently invested in high-yield savings bonds, ensuring that your money works for you even when you’re not actively managing it. This hands-off approach helps you stay committed to your financial plan and benefits from Compound Bonds’ 8.5% APY, allowing your investments to grow steadily over time without any extra effort.
In addition to the ease of automating your contributions, the feature also reinvests any interest earned, compounding your returns. Auto-investing with Compound Bonds offers a convenient and disciplined way to build wealth, ensuring that you stay on track with your financial goals, regardless of market conditions or personal distractions.
In conclusion, automated investing is a powerful strategy that simplifies wealth-building by ensuring consistent contributions to your financial goals. By removing emotional decision-making and procrastination, it helps you stay disciplined, even during market fluctuations. Whether you're saving for retirement, a child’s education, or general wealth-building, auto-investing ensures your money consistently works for you, maximizing growth over the long term. With tools like Compound Bonds’ auto-investing feature, building wealth becomes a hands-off, reliable process that keeps you on track toward financial success.
