So you’ve done your research and you’re tempted to open up an automatic investing account. But a key question remains: when is the best time to schedule your auto-investing?
In today’s modern world it can be so confusing to decide what to do with your finances. Notifications are flashing at you left, right and center, and it seems like everyone wants your attention, pretty much all the time! So it’s no wonder that many people tend to leave sorting out their finances until later. A great option for the busy professional is to set up an automatic investing schedule, to help unburden yourself from financial decisions and get your investing under a controlled schedule. But when is the best time to set up your automatic savings account transfers?
For most, the answer to this question is: right after you are paid. And the sooner that you set up your auto-investing account, the better. Here’s a look at some of the reasons why:
First, on getting started ASAP: have you ever heard the phrase that what’s important in investing is “time in the market, not timing in the market”? Many of us have a fear of investing, particularly because we are afraid of losing our money because of unpredictable market crashes or booms. Yet if you’re looking to time the markets you could be setting yourself up for a slippery slope, which ends up with you sitting on your cash for a very long period of time and not doing anything with it at all. When it comes to saving, over time, a dollar invested today is worth more than a dollar invested tomorrow; compounding is an investor’s best friend!
Secondly, let’s talk about your schedule: most of us have a pretty solid budget that we would like to stick to. We have set amounts for our rent, utilities, phone bills, subscriptions and other life necessities. Anything left over after the essential payments have come out is divided between savings and fun. But unless you have a willpower of steel, it’s incredibly hard to resist spending extra cash lying around in your checking account which has been earmarked for savings on something that has the potential to provide immediate gratification. That new suit would make everyone at work so jealous… But if you were to take money for your savings right after you are paid, and send them off to be immediately auto-invested, you won’t even think twice about the money dedicated to savings! It’s like your monthly 401(k) contribution – you don’t notice the money taken out of your salary because you never even see it in your bank account. Yet you still get the satisfaction of watching your retirement savings grow!
So scheduling your auto-investing as soon as you can, with a payment on a regular basis right after you get paid, could be one of the best decisions you ever make. Don’t delay, auto-invest today!