Automatic ETF Investing:   JUST SET IT AND FORGET IT!

What is Automatic Investing?

Automatic investing refers to the practice of regularly and automatically contributing a set amount of money to an investment account or portfolio without the need for manual intervention each time. This method leverages automation to ensure that investments are made consistently, typically on a weekly, bi-weekly, or monthly basis. The process is usually facilitated by financial institutions, brokerage firms, or robo-advisors, which allow investors to set up automatic transfers from their bank accounts into specific investment vehicles, such as stocks, bonds, ETFs, or retirement accounts.

What is an ETF?

Exchange-Traded Funds (ETFs) are investment funds that are traded on stock exchanges, similar to individual stocks. An ETF holds a collection of assets such as stocks, bonds, commodities, or a mix of these, and it often tracks an index, such as the S&P 500 or a specific sector like technology or healthcare.

Why set up Automatic investing in EFTs?

• Dollar Cost Averaging:  With automatic investing, you regularly invest a fixed amount into ETFs, buying more shares when prices are low and fewer shares when prices are high. This strategy, known as dollar-cost averaging, can reduce the impact of market volatility and lower the average cost per share over time.

 

• Low Expense Ratios:  Many ETFs have lower expense ratios compared to mutual funds, making them a cost-effective investment choice. When combined with automatic investing, this cost efficiency can lead to higher net returns over time.

 

• Set It and Forget It: Once you set up automatic investments, the process runs on autopilot, requiring minimal ongoing effort from you. This is particularly beneficial for busy individuals who want to invest consistently without needing to monitor the markets or manage their portfolios actively.

 

• Reinvesting Dividends: Many ETFs pay dividends, which can be automatically reinvested to purchase more shares. Over time, this reinvestment, combined with the returns generated by the ETFs, can significantly amplify the power of compounding, leading to exponential growth of your investment portfolio.

 

• Low Minimum Investments: Automatic investing in ETFs often requires low minimum contributions, making it accessible to a wide range of investors, including those just starting out.

 

Recommend the platform "STASH"(this is the one I have been using for 4 years and have been really happy with it).

• I chose the $3 a month plan
• you can invest as little or as much as you want.  For example you can invest just 50 cents or 50 dollars.
• my portfolio includes the following index funds: Schwab U.S Dividend Equity ETF (SCHD),  Vanguard Russell 2000 ETF (VTWO),  Invesco QQQ ETF (QQQ) and Vanguard S&P 500 ETF (VOO).

 

Disclaimer: I am not a financial advisor and am only sharing my experiences.  The information is for information purposes only.

 

If you sign up using the link below, you will receive $20 to start your portfolio off (and I will as well so its a win win):

Here is link to sign up:   https://get.stash.com/?code=heather0ohen