Automatic investing is a convenient and effective way to invest your money without having to actively manage your portfolio on a regular basis. Here are some automatic investing possibilities:
- Employer-sponsored retirement plans: Many employers offer retirement plans such as 401(k)s or 403(b)s that allow you to automatically invest a portion of your paycheck into a pre-selected mix of investment options.
- Automatic investment plans (AIPs): An AIP is a program offered by many financial institutions that allows you to automatically invest a set amount of money at regular intervals (e.g., monthly) into a specific investment.
- Robo-advisors: Robo-advisors are digital platforms that use algorithms to create and manage investment portfolios based on your risk tolerance and investment goals. Many robo-advisors offer automatic investing features that allow you to invest a set amount of money at regular intervals.
- Dividend reinvestment plans (DRIPs): A DRIP is a program that allows you to automatically reinvest dividends earned from stocks or other investments back into additional shares of the same investment.
- Target-date funds: A target-date fund is a mutual fund that automatically adjusts its asset allocation over time based on your target retirement date. By investing in a target-date fund, you can automatically adjust your portfolio as you get closer to retirement.
Automatic investing can be a great way to take advantage of compound interest and grow your wealth over time, without the need for active management. By setting up automatic investments through your employer, financial institution, or investment platform, you can create a long-term investment strategy that helps you achieve your financial goals.
