Some Benefits Of Automating Your Investments
If you’re striving for financial independence, you might’ve heard about the wonders of automating your investments.
You schedule your paycheck to be automatically transferred to your savings and investments every time it’s deposited into your checking account.
David Bach, in his book, The Automatic Millionaire, talked about how some of the benefits might be:
- your money is invested from your paycheck before you can spend it
- you build your wealth on autopilot
Automating your investments saves you time from having to schedule the transfers from your paycheck to your investments every time you get paid.
Initial Hesitations With Automating My Investments
I’ve been hesitant for years to set up automated investments from my checking to my Ally Bank savings account and Vanguard S&P500 Index Fund.
After reading a financial article about how once you become lax on the control and flow of your money, potential errors can arise, say, if you forget how much money you’re transferring every week.
Also, my income wasn’t stable week to week the first couple of years and I didn’t want my investments to pull money out of my checking only to result in overdraft fees from insufficient funds.
However, It Can Help Save Me So Much Time
It took me a couple of years to get a more stable income.
I also recently paid off $12,000 in credit card debt.
Now I have cash flow that’s freed up that I can invest with.
One day, I did the math and realized that automating my investments can save me a lot of time.
I think it can help save you a lot of time as well.
If time is money, how much time and money can you save by automating your investments?
Automating Investments Can “Multiply” Your Time
Rory Vaden, in his book, Procrastinate on Purpose: 5 Permissions To Multiply Your Time, talked about how in order to “multiply” our time, we should spend time building a system that will save us time in the future.
The premise is simple:
for example, spend 50 minutes now to set up automated processes that will help you save 5 minutes a week in the future.
Sounds small and pointless, right?
After all, it’s only 5 minutes.
But when you multiple that 5 minutes across 52 weeks in a year, you’re saving 260 minutes.
That 50 minute one time investment saved you 200+ minutes in the future.
Over the course of a year, you now have more free time to work on that project or side hustle to make more money to reach financial independence faster.
That’s a double win, isn’t it?
You’ve saved time AND money AND can use it to make more money.
How Much Time Am I Saving Per Year?
A month ago I took the leap and set up automated transfers from my checking to my Ally savings and Vanguard.
I get paid every week.
I normally spend about 10 minutes a week moving the money manually from my checking into those accounts.
Now, by taking 15 minutes ONE TIME to set up automatic transfers for the same amount every week into the same accounts, I save 10 minutes per week.
10 minutes per week times 52 weeks is 520 minutes saved.
That’s 8.66 hours a year I saved and can use toward working on blog posts or other side hustles.
10 min/week x 52 weeks = 520 minutes saved (8.66 hours)
To put it another way, if minimum wage is $12 before tax, $12 times 8 hours working is almost a $100 value.
All from taking 15 minutes one time.
What To Do With All That Time Saved?
For me, I can use that time to work on blog posts.
Not only can my blog posts add value to others and help them on their journey to financial independence, it can be a passive revenue stream after I publish and monetize it.
If your goal is to be YouTube famous, you can use that freed up time to work on your videos!
Once you publish it, you can monetize it for passive income.
You could be an artist on the road to F.I. and have an Etsy store.
With your freed up time, you could use it to keep working on your craft to sell online.
Make more money.
Reach F.I. faster.
In Your Money or Your Life by Vicki Robbin, she talks about the tradeoff with working so hard to make money that you forget about your health.
My dad told me a saying in they have in Thai, “Don’t work so hard to make money for your doctor.”
I interpret all of this to mean with the time saved, to invest some of it toward exercise.
If I only save 10 minutes a week from automating my investments, if I don’t do anything else, that’s 10 minutes I can spend doing pushups or sit-ups.
This might sound like blasphemy, but you technically can just do nothing with those 10 extra minutes a week and relax instead.
“BLASPHEMY!” you shout.
“How dare you tell me to relax when there is so much hustling that needs to be done!”
You can schedule those 10 freed up minutes once a week to be your “relaxation time.”
You can turn off your phone, peruse social media, listen to music, have your guilty pleasure dark chocolate with a glass of Champagne.
It’s up to you.
You now have 10 WHOLE MINUTES!
Where Else Can You “Multiply” Your Time?
#1. Investing One Time In A Remote Car Starter
My friend paid over $400 for someone to put a remote car starter in his new car.
He now just points his remote at his car from inside his house and the engine starts.
Imagine saving time in the super hot part of the summer, and the super cold part of the winter, from having to run out the house and cool/warm the car before you go to work.
In the winter when my car is frozen, before work, I spend 2 minutes walking to my car, turning the car on, blasting the heat, and then going back inside to finish getting ready while my car warms up.
If I invest the $400 and get a remote car starter, assuming I use it only in the winter for November through April, that’s 6 months times 30 days = 180 days.
180 days times 2 minutes per day = 360 minutes per year.
That’s 6 hours.
That’s 6 hours of your time you’ve freed up with a $400 investment.
Not to mention, you might be using the car for a couple of years.
That 6 hours multiplied over years might be worth it for you.
#2. Setting Automatic Credit Card Payments
My dad does this.
He sets up his credit cards to pay off the entire balance at the end of every cycle so he doesn’t have to manually do it.
Assuming you use just one credit card and pay it off every month, it might only take you 1-2 minutes to press “pay balance” on your app or desktop.
But if you set it to autopay the balance, how much time could you save?
2 minute times 12 months is 24 minutes per year.
24 whole minutes!
That’s like half a Netflix episode.
Or a short nap!
One Thing To Be Careful With
When automating your investments, be careful you don’t forget the dates you scheduled in the future.
To stop overdraft fees in my checking from happening, I made sure to jot down on my calendar when money is supposed to be pulled out.
This helps me stay alert and aware in case I pay one bill and don’t have enough money for the investment transfer.
While some of these time multipliers might sound mundane and small, collectively over the course of year, they have the potential to be serious time savers for you.
Imagine in the long run, you:
- freed up your time
- used it wisely to generate additional passive income to reach F.I. faster
- paid down debt
- invested time in your health
- living a more productive, happier, and healthier lifestyle
Sounds good doesn’t it?
All it takes is the initial effort to start automating your investments!
Can you think of other aspects of your life that can be automated?
How much time will it take for you to automate that?
How much time will you save in a year if you do so?
Share them in the comment section below!
- The Automatic Millionaire by David Bach
- Procrastinate on Purpose: 5 Permissions to Multiply Your Time by Rory Vaden
- Your Money or Your Life by Vicki Robin
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