Set It and Forget It: How to Grow Wealth Through Automated Investing
Written by Shara Cox
When it comes to growing your wealth, consistency is often more important than timing the market. While many people have good intentions to save and invest regularly, life's expenses and competing priorities can make it difficult to follow through. That's where automation can make a significant difference.
By setting up an investment account and automatically directing a portion of your wages into it each pay cycle, you can build long-term wealth with minimal effort and remove the temptation to spend money that could otherwise be working for your future.
Why Automate Your Savings?
The biggest advantage of automation is that it turns investing into a habit rather than a decision. Instead of waiting to see what's left at the end of the month, a set amount is invested as soon as you are paid.
This approach follows the principle of "paying yourself first" and can help you:
Stay disciplined with your financial goals
Reduce the temptation to spend surplus cash
Benefit from regular investing regardless of market conditions
Build wealth steadily over time
Avoid the stress of trying to time investment markets
Even small, regular contributions can add up significantly over the years thanks to the power of compounding returns.
Getting Started
The first step is to establish an investment account that aligns with your goals and risk tolerance. This could include:
A managed investment fund
An exchange-traded fund (ETF) portfolio
An investment platform offering diversified portfolios
A brokerage account for direct investments
A financial adviser can help determine the most suitable investment strategy based on your objectives, investment timeframe and risk profile.
Set Up an Automatic Contribution
Once your investment account is established, arrange for a fixed amount of your salary to be invested automatically each pay period.
Many employers allow wages to be split between multiple bank accounts, making it easy to direct a nominated amount straight to an investment account. Alternatively, you can establish a recurring transfer from your everyday bank account immediately after payday.
The key is to make the process automatic so that it happens without requiring any ongoing decisions.
The Benefits of Regular Investing
Investing the same amount regularly allows you to take advantage of a strategy known as dollar-cost averaging.
When markets fall, your regular contribution purchases more investment units. When markets rise, it purchases fewer units. Over time, this can smooth out the impact of market volatility and reduce the pressure of deciding when to invest.
Regular investing helps shift the focus away from short-term market movements and towards long-term wealth creation.
Start Small and Increase Over Time
One common misconception is that you need a large amount of money to start investing. In reality, many successful investors begin with modest contributions and gradually increase them as their income grows.
Consider directing:
Part of a salary increase
Annual bonuses
Tax refunds
Other windfalls
into your investment account.
By increasing contributions over time, you may accelerate your progress towards important financial goals such as purchasing a home, funding education expenses, or building a comfortable retirement.
Make Your Future Self a Priority
Building wealth doesn't have to be complicated. By establishing an investment account and automating regular contributions from your wages, you create a simple system that works in the background while you focus on other priorities.
The most successful investment plans are often the ones that require the least effort to maintain. Taking a "set and forget" approach can help you stay consistent, reduce financial stress, and steadily move closer to your long-term financial goals.
If you'd like assistance establishing an investment strategy that suits your circumstances, speak with your financial adviser about the options available and how automated investing could form part of your overall financial plan.