Financial Freedom- Automate Savings
Automate your savings.. What does that mean and how will it help you achieve your financial goals?
First: What does it mean? It means you take a portion of your paycheck and have your company automatically deposit a that into a savings or investment account.
Second: How does it help you achieve your financial goals? By doing this consistently every check for a period of years, your money will grow at a rapid rate through compounding interest.
For this article, I’m going to focus mostly on the Second reason. In a past blog I wrote about being disciplined. Setting up automated deposits and not touching them requires discipline. Let’s use a small sample size of $100 a month ($1,200 annually) for 30 years. I will assume the market rate of return will be 8%. 30 years times $1,200 equals $36,000.
Now lets see how much growth you would get out of that if you automate your deposits monthly and remain consistent for 30 years. That $36,000 that you invested would be worth $149,036!! That’s a gain of $113,036. You see how this will impact your future? It grows due to compounding interest. The best part is… you didn’t have to do anything. The deposits were automatic while you went about your day.
How do you set up your automation? There are a number of investment companies out there that allow you to set up automated deposits to buy stocks. I personally us Vanguard, but there are many other great ones out there.
Use the power of automation to achieve your financial goals.
Here are some of my favorites that I use for investing..
Note: My automated ‘savings’ is done through direct deposit