How to Make Investing Less Scary: Make it Automatic

By J.J. Montanaro, CFP™
USAA Financial Planner

There’s a lot in life that can scare us.  I vividly remember our frantic neighborhood search years ago after my toddler son wandered away from the babysitter. And I can still recall my dry mouth and desperate heart as my wife and I sat in the hospital waiting room while our daughter was undergoing surgery. You’ve no doubt had your own scary encounters as well. You know, the ones that bring an empty feeling, even pain, to the pit of your stomach.

There’s another less serious issue out there that also strikes fear into the hearts of many: investing.  Though it shouldn’t be a fear generator, I regularly see and hear from folks who are filled with trepidation at the thought of it. So, in a financial planners attempt to be a healer, here’s one great way to ease those fears: do it systematically.  Here’s how systematic saving and investing can help:

It’s easy. Whether you’re signing up to contribute to a 401(k) plan, signing up for the TSP in the military, or setting up automatic investments into an IRA, it’s typically a few keystrokes or a simple form or two to get the ball rolling.  I bet you’re less than 15 minutes from getting started. Now that’s not very scary.

It’s all purpose. Sure, I love the idea of building your retirement nest egg or funding the kids’ college through systematic investing. But there’s also systematic saving, and it can be a great way to accumulate cash for your emergency fund, holiday shopping, or next year’s vacation. Whether it’s long-term investing or short-term saving, doing it systematically is truly all purpose and getting the job done will leave you with a warm and fuzzy.

It takes timing out of the equation. “Is now a good time to invest?”  I hear that frequently from those looking for an insight gleaned from the crystal ball I don’t have. What I do know is that by investing a little chunk each paycheck or month and not letting what’s happening (or not happening) in the market dictate your behavior can be a calming approach to investing.

It can leverage time. The time value of money is a complicated way to say that earning interest on your interest or compounding interest is a powerful ally to have on your side. But that’s only the case if you get started sooner rather than later. And now for the requisite “oooh-aaah” moment: $100 per bi-weekly paycheck growing at a hypothetical 6% will be $431,476 in 40 years. That could put a smile on your face.

Systematic saving or investing can put you on a path towards meeting your goals, whatever they may be. As to my son, yes, we found him safely ensconced in a neighbor’s house and my daughter is beautiful, healthy and happy. Our fears passed, we moved forward and you can do the same with your plans to build for the future.

Want more tips about saving for your future?  Take the Military Saves Pledge today and visit www.militarysaves.org for inspiration and information on successful saving.

 

Tip of the Day

  • Written by Guest Blogger | March 17, 2014

    Check out the #savings checklist tool containing 15 “savings accomplishments” to assess your savings effectiveness: https://bit.ly/2fdv5O2

Saver Stories View all »

How Smart Financial Decisions Can Create Opportunities 

Written by | November 22, 2019

Written by Stephen Ross, America Saves Program Coordinator | November 22, 2019

Of the many stories Military Saves shares, most describe how someone was in dire straits financially and worked their way out of it with the help of Military Saves. This time we want to highlight a different kind of story. This is a story about how responsible financial decisions can build on one another to create opportunities you thought only the super-rich enjoy.

Read more...

Setting a Goal Leads to Success

Written by Super User | May 24, 2019

Growing up, Marisa’s dad had always talked about saving first, but she said she didn’t really internalize it until much later. “I was drifting along with no plan, carrying a little bit of revolving debt, saving some money here and there, but without a real plan for it.”

Read more...

Involving Kids in Family Finances

Written by | April 19, 2019

 

One of the best lessons we can share with our kids is about money. By middle school, kids should have a good understanding of how money works as well as the importance of saving.

Read more...