It is easy to overcomplicate your finances, but the solution may be simpler than you think. If you are feeling overwhelmed by all the investment choices and unsure of where to start, it may be time to add some automation.
By automating your savings and investments, you can reduce the stress you feel. Even more importantly, you can stop procrastinating and finally get started on the path to a more secure financial future. Time is on your side when it comes to saving and investing, and the sooner you get started, the better off you could be. Here, Craig Cecilio, founder of DiversyFund, shares some smart strategies to simplify your investments and automate your savings.
Opt for Direct Deposit
The simplest way to automate your financial life is signing up for direct deposit. If your employer offers this service, and most do, there is no reason not to receive your paycheck this way.
You can automate your financial life even more by splitting your direct deposit into savings and checking components. Diverting a percentage of your paycheck to a savings account forces you to live on less than you make, enforcing the kind of fiscal responsibility that will serve you well in the coming years.
Accept Auto Enrollment for the Company Retirement Plan
Many employers now use auto-enrollment for their 401(k) and other retirement plans. Under the auto-enrollment scenario, new hires are automatically enrolled in the company retirement plan unless they opt out.
If your employer offers auto-enrollment for their 401(k) or other retirement plan, you do not have to do a thing. Just allow the auto-enrollment to go forward, and then revisit the investment choices and contribution percentages at your leisure.
Sign Up for Auto Escalation as Well
Automatic escalation is another great feature of many modern 401(k) plans, and it is one you might want to take advantage of. Once you sign up for the program, the amount you contribute is automatically raised on an annual basis.
This automatic escalation takes the guesswork out of contributing to your 401(k) plan, so you can save more and feel more secure about your retirement savings. Just check with your human resources department to sign up for automatic escalation.
Set Up a Monthly Transfer to Your Favorite Investment Account
If you want to automate your savings and investments and enforce financial responsibility, just set up a monthly transfer to your favorite mutual fund or brokerage account. This simple step can help you build wealth for the future – and simplify your investment life in the process.
You can also use a monthly transfer to build your emergency fund. Just set up a regular transfer of money from your checking account to a money market or savings account. Once your emergency savings are fully funded, you can redirect that monthly transfer to longer term investments.
Simplify Your Investments with REITs
You can also look into diversifying into alternative investments like multifamily real estate by buying into Real Estate Investment Trusts (REITs). REITs are companies that invest large amounts of money into residential multifamily homes, commercial buildings, healthcare facilities, and large-scale industrial buildings as well. This method of investment allows investors to diversify their portfolio without the hassles of directly acquiring property.
Diversification through access to numerous projects is a huge benefit as the investor can grow their real estate investments while reducing some of their risk. For over 30 years, real estate beat the stock market by a significant margin with less daily volatility. You can also benefit from tax deductions, appreciation of your asset and have a steadfast method of protecting yourself from inflation
Saving and investments do not have to be complicated subjects. Once you put your financial life on automatic, you can sit back, relax and concentrate on more important things – like having fun with your friends and family.
Craig Cecilio started his company driven by his passion to open up the world of real estate investment to average Americans. After assembling a team of industry professionals that shared his vision, they got to work thinking about how they could eliminate the high costs that kept people from investing. Their solution was to create a vertically integrated organization that acted as the developer and sponsor of every investment they offered. From there, DiversyFund was born.