Exploring Your Retirement Prospects? One Simple Strategy to Rapidly Augment Your Financial Assets Geometrically
Rebooting Your Retirement Savings: The Smart Way to Crank Up the Gain
Are you feeling discouraged that your retirement accounts aren't growing fast enough? Don't worry, you're not alone in this predicament. The unpleasant reality is, most folks aren't proactively bolstering their retirement funds, and they're inadvertently heading toward a future fiscal struggle.
Thankfully, there's a simple yet effective strategy that could turn your retirement savings game around for the better - set up automation for your savings and investments.
The Silver Bullet for Retirement Success
That's right, the game-changing secret to growing your retirement nest egg exponentially is to automate as much of your saving and investing as you can. But don't take our word for it; stick to the task, and you'll see the difference.
Why is it so tricky, though, to put this strategy into action? With today's technology and the constant barrage of information, people are more overloaded and distracted than ever before. It's the digital era that gets the blame for keeping us interconnected and vulnerable to distractions from the rest of the world.
The end result is that our busy lives become filled with inefficiencies. Adding to this is the allure of avoiding guilt for neglecting to respond to friends, family, colleagues, and even bosses. Investors are not immune to this scenario, either.
That's why it's essential to get the simple tasks done, like depositing money into a brokerage account or IRA, or actively managing the funds once they've been deposited, off your platter. A recent investigation by Vanguard, a retirement plan administrator, shows that people who leave rollover IRA money uninvested are twice as likely to have done so unintentionally than intentionally.
It's easy to let things slide when you keep thinking you'll get around to doing them later. The key is to establish automated actions that don't require additional effort beyond setting them up. And there are several recurring tasks related to your retirement savings that you'll want to put on autopilot.
What (and How) to Automate
First Things First: Ensure regular money is added to your retirement account on a regular basis should be the first priority.
Corporate 401(k) plans and similar retirement plans are an exemplary model for how this should take place. These plans are funded with money deducted from workers' paychecks before they're issued, and workers only need to make a one-time request for their payroll deductions. After that, the deductions happen automatically every time the job pays them, without any additional action required from the saver, unless they opt to increase (or decrease) the percentage of their checks going towards their retirement account. In most cases, workers soon stop noticing the money withdrawn.
You can set up a similar system with a conventional brokerage account or even a traditional or Roth IRA. Every brokerage firm has slightly different processes, but most of the major ones can handle automatic fund transfers from a bank account to a brokerage account or IRA on a recurring basis. All you need to do is provide them with permission once. Of course, you can turn these automated deposits off just as easily.
The second behavior you'll want to automate is routing those deposits for investment in the assets you prefer. Most investment firms allow account holders to make automatic recurring purchases of mutual funds, although a few can also arrange for automated investments in individual stocks and exchange-traded funds.
Be cautious if you choose to buy individual stocks this way. This approach lends itself to investing in mutual funds, which are diversified collections of stocks. It's possible that you might forget you're buying stocks and end up investing too heavily in one company.
However, a hybrid version of this strategy might appeal to you. While robo-advisors aren't for everyone due to their higher fees, there's no denying their value. If you have trouble finding the time to occasionally rebalance your portfolio, a robo-advisor can do it for you. For many investors, the better performance they get out of their portfolios often outweighs the higher upfront costs.
Make Time Now or Pay the Price Later
Are you finding it challenging to find time to manually make deposits into your retirement savings account and then decide how you want that cash to be invested? If so, you'll likely struggle to make time to set up these automated processes. But this is one of those instances where busy people need to prioritize making the time at least once to make it happen and then leave matters on autopilot.
It's worth the effort in the long run - and this might help motivate you. Investing just $300 per month into an S&P 500 index fund for 30 years at an average annualized rate of 10% (approximately what the index has returned on average in modern times) would result in having around $680,000 at the end of the period.
The primary challenge lies in consistently depositing and investing that money amid any distractions or market headwinds. Get the risk out of the equation, and you'll almost certainly wind up much wealthier in the long run.
- To accelerate the growth of your retirement nest egg, consider automating your saving and investing, a strategy that's proven effective.
- Automating deposits into your brokerage account or IRA is crucial, as people who don't invest rollover IRA money are twice as likely to have done so unintentionally.
- Once the money is deposited, routing it for investment in preferred assets should be automated, whether it's mutual funds, stocks, or exchange-traded funds.
- While robo-advisors might appeal due to their ability to rebalance portfolios, it's essential to prioritize setting up these automated processes initially, as busy people must make time for them once to reap the rewards later.