Invest your spare change automatically!

by Norman Corda

You don’t see it and it just gets assigned automatically to your investment portfolio automatically!

How cool is that?

Investing automatically doesn’t need to be painful and the availability of investment plans are just in easy reach. Plus, it gets you disciplined without even thinking about it.

It helps you to be proactive with the basics of investing without the guessing game of knowing when to buy into the market.

Here how’s it works, when you invest in a regular schedule, you are not timing the market. You’ll be buying in the shares of the market when the values are high and when the values are low.

In return, over time, it will end up averaging each other out. Since its impossible to predict how the market reacts to a particular geopolitical event being in the ring in both ends of the spectrum is a win-win for you in the long run.

Where to start?

It is best to pick amounts that is comfortable for you. Especially of you are newer to investing.

This will give you the chance to get used to investing and know more about the eb and flow of the market and see the natural movements in the markets without getting rattled.

You will learn that markets work in a cycle and its pretty impossible to predict.

See how John Oliver butchers’ retirement plans in this episode of Last week tonight and how you can invest in a low-cost investment funds and come out ahead in the long run.

Moderate Increases over time

Consider moderate increases with your contributions.

If you are working for a company and deferring 5% of your paycheck going towards your 401K.

Try increasing it to 1% every year until you reach the maximum contribution.

You will be harnessing the power of compounding interest and have an active portfolio that you can see grow exponentially.

Use a retirement calculator and see how you can leverage compounding interest to your favor.  

Make your own coffee!   

David Bach, has been preaching investing automatically since his book, Automatic Millionaire, was released in 2003.

The practical and painless approach makes your goals attainable even if your company doesn’t have 401k plans or other investment vehicle to start with.

He’s latte’ factor calculator shows you the potential retirement savings you can have by paying yourself first without shelling out big amounts to start.

Picture this, instead of buying a $5 cup of coffee every week, invest it.

With an 8% return, in 10 years you have earned $4,000.

How about 20 years? It’s $12,800. So, if you see the growth in 40 years, it’s a whopping $72,700.

This is just using the $5 coffee purchase and diverting it to investments.

Start automatically investing with low cost funds

With the age of powerful phones and convenient apps, starting your investment accounts is a breeze.

With the advent Fintech companies, investing on yourself first has never been easy. Acorn is a straight forward service that you can assign specific amount to invest proactively.

This is great to start when your living with a tight budget and a small paycheck.

Acorn helps you squirrel away some change and place it on a mix of exchange-traded funds (ETF) funds and bonds.

The best thing about it is you can increase your monthly deposits and set the time of your automatic deposits daily, weekly and monthly.

Vanguard Group Inc.  is a low-cost investment solutions that you can start and assign a portion of your paycheck and start “paying yourself first.”

Vanguard has been one of the lowest-cost ETF in the market, giving you the upper hand from the start.

Look into Real Estate Investment Trusts (REITs), its investment into real estate portfolios that pays dividends.

Have an overview of REITs and how easy it is to invest in the real estate market without the  buying the whole apartment complex.

Important take away

Start today! The sooner you start, the sooner you start the habit and the bigger the savings.

Changing your perspective with investing will turn your mindset to more on saving and investing than spending your hard-earned money on a $5 cup of coffee.