My last article starts to explore the subject of retirement investing, but it barely scratched the surface of the subject. Today I want to show you how to make investing less complicated. Yes, getting educated on all of your options is important. I highly recommend you do take the time to learn more about investing. But I also highly recommend you start investing immediately — even if just a little bit at a time today.
Photo via Wikimedia Commons
The best way to avoid analysis paralysis – you know, that thing that happens when you go to buy jelly at the grocery store and there are 30 different brands, and you freeze for 5 minutes – is to automatically invest.
When you set up automatic investment you remove your emotions, fears, habits, and forgetfulness from the equation. There’s no thinking involved when the money never hits your bank account — it goes straight to your investment account.
If you have a 401(k) at work and participating, you are already doing this. No one calls you each time you get paid and asks you what mutual funds you want to invest in that week. No, your account is setup to automatically deduct some percentage of your paycheck and invest it to whatever choices you made when you started.
It’s a thing of beauty.
If you don’t have this set up yet, follow these steps and get started today:
The best part is, no matter what account you have: 401(k), Roth 401(k), Roth IRA, 403(b)…all of them have automatic investment options. For IRAs, you won’t always be able to deduct it straight from your paycheck, but you will have the opportunity to automatically take it out of your bank account. Ask you bank or broker about Automatic Investment Plan (AIP) and you should be able to set up something similar to your 401(k) plan.
If you need help with this, just call customer service. They’ll be glad to take your money automatically!
Another great thing to use automation for is saving up for financial goals. It can seem daunting to save up 6 months of expenses into an emergency fund. But if you break that huge goal into a monthly amount over a set period of time, it can be a lot easier to manage.
Plus, you won’t have to think about saving for your goal… it will just happen automatically. That’s the beauty of automation.
I’d love to hear about some success you’ve had with automating your investments and your savings.