“Set & Forget” Investing

After my divorce from the gambling husband, my inheritance was pretty much gone, with the exception of a few properties that gave me a small monthly income. But I did something smart.

When the rent from the properties would arrive, before I spent a cent, I’d put a portion into my savings account. I did it automatically. I filled out a form and the bank took are of the rest.

I didn’t even have to think about. And even though it wasn’t a lot, it’s amazing how my savings grew over time.

Later, as the cash accumulated, I automated my investing, by using a technique known as Dollar Cost Averaging (DCA-click to learn more). DCA takes the emotion out of investing, reduces the risk of losing a lump sum in a down market and reduces costs because you buy less when your investments are expensive, and more when they’re cheaper.

Maybe you’ve already automated your savings and investing. Good for you. But if you haven’t, I urge you to do so.

Arrange for the bank to transfer fixed sums to savings on a fixed date each month. The date should be at least a few days after the money comes in.

If you’ve got more than one savings goal — say, building your emergency fund and taking a vacation—set up more than one savings account. **Note: Avoid savings accounts that charge fees.

I recommend having 6-8 months living expenses in an emergency fund. Once you have that cushion, then you can start investing automatically.

What I love about automating is it’s painless. You don’t miss what you don’t see. And it’s mindless. No discipline or reminder notes are required.

Have you tried automating your savings? Share your experience in the comments below.

Comments & Feedback

  • Pati

    I love this, Barbara!
    I don’t have auto savings, but it has made smiling a great idea smile!
    Wanted to share a chuckle.
    I use Discover bank. (Concerned about that merger, but for now….)
    So. My checking is called a Debit account.
    That’s Disco Debbie.
    My savings is Disco Sal.
    So, I give Sal money every month.
    I think he might be saving up to give a certain glitter girl a ring.

  • Lisa

    Thanks for the “dollar cost averaging” tip. I need to “lock away” a lump sum of money a couple of times a year, otherwise I will blow it on something!

    Interested in your book recommendation. After one of my investments paid me slightly more than my March salary which I worked soooo hard for, I felt, for the first time in my life, that my money was trying to talk to me…It was if it was saying “I’m going to look after you and you don’t even have to work for me. All you have to do is respect me by tucking me into a nice account with nice interest”!

    • barbara huson

      ohhhhhh, Lisa, I love that message from your money. I bet that’s exactly what it is trying to tell you. Glad you’re doing DCA…that’s a great way to let money take care of you without you even having to remember to do anything. Easy money!!!

  • Susanne

    I like dollar cost averaging and I use it in a more active way as value cost averaging (VCA) where I invest a little more each time a chosen stock goes down. It´s more hands on because I also take profits when it goes up, but I like it that way.

    • Lisa

      Susanne,

      VCA sounds even better, because I like choosing my own stocks.

    • barbara huson

      I never heard of VCA, but I love it. What a great idea. You buy more shares at a cheaper cost. Smart woman! Thanks for sharing.

  • Pauline

    At the moment, I have automatic savings set-up setting aside at least $5/account, and I contribute $10 per month to my investment accounts. This is comfortable for me at the moment. When I get a raise at work, I re-evaluate these amounts, and adjust.

    • barbara huson

      That’s exactly the best way to start automating…small amounts that you can afford. And those small sums add up quickly. Then when you can afford more, you up your contribution!! So smart!!

  • Lisa

    Well done, Pauline!!!! Little bit of somethin somethin is better than absolutely nothing! You can increase later. This effort will accumulate.

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Meet Barbara Huson

When a devastating financial crisis rocked her world, Barbara Huson knew she had to get smart about money… and she did. Now, she wants to empower every women to take charge of their money and take charge of their lives! She’s doing just that with her best-selling books, life changing retreats and private financial coaching.

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