I am mechanical

No, I am not a droid or a iRobot. I just make my life easy by automating a lot and being mechanical in decision taking when it comes to investing and trading.

In order to save time and and to avoid forgetting to invest, most of the effort is automated.

We transfer automatically our salary to our joint accounts. This has some benefits.

  • The money left on the personal accounts is our personal fun money. We can spend it as we want, splurge, have dinners, buy gifts, save for a bigger item. No questions asked. It is important to have this. I allows us to live already now.

 

  • There are automatic transfers to our different savings account and investing accounts. This way, we do not forget to contribute to our extra legal savings, to our medium term fund and to our investing account. This is for sure a main driver for our current saving rate. It comes without any effort from our side. That is why our savings rate has a stable baseline

 

Is this true? Is it effortless? Well, once it is set up, it is. But in order to set it up, you need to make some efforts

  •  You need to establish and agree on a budget. Not just a budget, but a budget to live below your means, to live frugal. Having aBol-4946budget is corner stone to automate most money transfers. You know what comes in and what you want to do with it. You now can automate. Some parts are not automated: not all incoming funds are like a clock work: bonus payments, tax refunds just to name a few. But in these we are mechanical: for each of these payments, we know what the default action is and we execute it
  • You need to have an investment plan for the extra money. You need to be convinced of your plan. And be able to stick to it even in high volatile markets. We have this plan in place: we index. Each month we invest according to our asset allocation. There are rules in place that tell us what to buy. The actual buy order is still manual.

Sounds boring? It is!

But that is the beauty of the system. As all elements are  either automated or a habit, there should not be no big exception to report or no juicy story to tell. This allows you to live worry free when a bill comes in or a payment is due. You now can spend more time living your life.

Are you mechanical? What tools do you use?

 

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17 thoughts on “I am mechanical

  1. Ciao ATL,
    I am quite mechanical, but I need to get a bit of that Italian flair in investing too, so sometimes I go ballistic and bend the rules a little… But in reality I am a boing old fart when it comes to investments… 😛
    On automatic transfers and investments… No, I like to be more in control and maybe adjust from case to case…

    ciaociao

    Stal

    Liked by 1 person

  2. We definitely run the automated/mechanical system over here. Transfers to our online joint savings happen bi-weekly from my checking and monthly from my wife’s. We do the Roth IRA contributions are scheduled right after payday as our contributions to our daughter’s 529 plan.

    If you don’t see it, it’s hard to miss it! 🙂

    The only pain in the butt with setting it all up is changing institutions. When we changed from our bank to a credit union, I had to start all over with setting up the mechanics again.

    — Jim

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  3. Definitely on “auto-pilot” in terms of finances, investing, paying bills, etc. Do they have auto-bill pay there? I have it for things like credit cards but many of our municipalities (think water and sewer bill, etc.) still do not have any kind of auto pay. That is about the only thing I have a check book for! I am writing a post on a similar topic for tomorrow actually! It will look at other parts of your life and what you put on “auto-pilot”. Thanks for the “lead in”!

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  4. We are mechanical all the way! 🙂 We try to time all of our deductions and investments to coincide with our paychecks, so we never really see the money in our accounts, and don’t feel we have the money to spend. That works well for us!

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  5. ATL,

    Automation is something many people leverage to boost their savings and overall money management. Personally I prefer to keep my fingers on the buttons and don’t automate anything. I even pay my telecoms bill manually at the end of the month.

    The reason I do this is because it keeps me on edge! In the back of my mind I’m always crunching the numbers, which helps in achieving my goals.

    Best wishes,
    NMW

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  6. Good day, Mr. ATL

    First of all, I hope your new job is going well and you are settling into everything that a new job brings.

    The tools we use here in the US like Mint to track expenses and Personal Capital to track our whole portfolio are just amazing. Also a bit of a problem at times as it is so easy to open PC up and look at your investments and by default stock movements. One has to be disciplined.

    Every bill we have is automated, every monthly transfer to Vanguard, according to our allocation is also automated. And it’s easy to up the size of the monthly transfer if we so choose. The app from Vanguard, fingerprint enabled, makes it even easier.

    It is also important to take time out of being the robot and check in now and again that all systems are set as you desired. Oh, being a human does take time, doesn’t it? 😁😀

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  7. ATL – you and I are SO much alike! I’ve used automated transfers from our checking account to various investments funds for years. It’s the best way to dollar cost average! Good tip!

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  8. ATL,

    Automatic investing is the way to go. Even though I know this, recently I was making some significant changes which involved selling off assets and reinvesting. It was difficult to manually do this. I continually found myself looking to time the market.

    I look back at the 529 plans we set up for our children. We invested and then left them alone. They have grown significantly and the hope is all of college will be paid for using these accounts.

    Good advice.

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  9. Being mechanical is my main goal for investing towards financial independence! And more so for me because I invest only in low cost mutual funds and not in individual stocks. There is nothing bad about it…infact, the more passive the income streams the more mechanical it will be. Go lazy!

    I have 6 different income streams now from six different mutual funds. And for two of them, I do not invest cash monthly anymore…reinvesting monthly dividends automatically is the only investment in those two funds i.e. they are self driving 🙂 How much more mechanical can it get hey 😉 Love it!

    Once you start in your new job, you will be thankful for this automation! Best of luck for your new job.

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  10. I use a mixture of manual and automatic transfers – all regular bills are paid automatically from my current account because otherwise I’d probably forget to pay one at some point and I don’t want the worry of that. I used to have lots of different accounts for different types of expenses and income and I would manually transfer money between them every month, but it got too complicated and time consuming so I streamlined and now I have very little work there each month. Since I don’t have a regular fixed income at the moment I can’t specify a fixed sum to be transferred automatically to my depot each month, but if there’s any extra money sloshing around my accounts at the end of the month I transfer them manually to my clearing account so I can buy more ETFs when conditions are right (e.g. I don’t buy ETFs in chunks of less than €2000 or so, since there’s a flat €4,95 fee for each transaction). It would be nice to have everything automated and if circumstances change in future I’ll definitely optimise things – optimising is all part of the fun!

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  11. Hey ATL, no we aren’t very mechanical except with our payments. We set most things to auto pay – but transfers, no, we do them ourselves. Maybe when we have more income coming in, we may change to that approach to save time.

    Tristan

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  12. I am also pretty automated when it comes to saving: my pre-tax contributions, HSA, and donating to church are all automatic. A portion of the money left over from those goes into index funds. The rest is for me to spend! Automatic may be a little boring, but I prefer to have my time and energy free for other things.

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  13. Automation is the only way. I have set up 3 current accounts as they offer better interest than a savings account. I have to shuffle the money around from one to the other at the start of the month as there is a minimum deposit to get the interest. But it’s all done behind the scenes and it’s nothing for me to worry about. You only have to set it up once!

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