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 abudget 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?