Investing can be a daunting process and, even though we intuitively know that saving today helps us have more purchasing capital for tomorrow, that starting to invest now pays out exponentially down the road. In this article, we want to encourage and educate you on how you can automate investing, and take away both the headache and the fear strongly associated with investing.
Automate Savings & Investing
We find that the laws of physics, basically, apply almost everywhere, and the hardest part of anything is starting. It’s easier for us to spend on that coffee rather than invest in something you won’t see for years (or months) to come. The reward for spending extra money is more rapidly accessible rather than waiting. This is true, it is why we have an addiction to bad habits such as impulse shopping. So, what if I told you that there is a way to automate this process with micro-investing?
There are two basic solutions:
- Allocate a percentage of your check to be immediately sent to a separate account. If the money is automatically subtracted from your monthly income you are no longer paralyzed with the problem of being tempted to spend that money.
- Use apps that scrapped money by rounding up on each transaction. Our CMO Patrick is the evangelist with Mylo and the app effortlessly takes money from daily transactions and allocates it to a separate account designated for investing.
The same tricks can and SHOULD be used for saving in general. You should consider having no less than 3 months of living expenses in your saving (for just in case moments) and a recommended range of 8-10 months in savings. Life is abundant with misfortune, for which we can thank Murphy’s Law. However, it is our obligation to be prepared for a disaster when it happens.
Drop The Learning Curve & The Stress
Investing, regardless of the instrument or industry, is tremendously stressful and equally difficult. If we were to explore Pareto’s Law, we’d see that 80% of successful and profitable investment opportunities can be attributed to 20% of investors. This non-linear correlation is even more nonproportional with investing. Less than 5% of successful investors account for almost 100% of profitable wins. The point is – investing is hard. Investing takes a remarkably long time to learn and perfect. You must be prepared to learn and fail if you desire to become a part of that 5%.
Most people don’t have the patience, innate desire, or simply the time to make it as the top 5% of professional investors. Luckily, there is a solution. We can leverage those investors’ time and skill set to build successful portfolios. No, you don’t have to learn the tedious formulas like the Sharpe ratio, RoR, and VaR to win. Simply pick an investing vehicle that meets your desired risk ratio and dive in incrementally, using proper risk management.
Set and Forget
Adding onto the previous section, once you have found a service provider and/or a professional to manage your portfolio you can set your money in a managed account and “forget” it. You can continue to enjoy life not having to be glued to a monitor continually viewing trading potential opportunities. You no longer need to stress about drawdowns and poor risk management while not having to overthink the process of taking profits and exciting positions. All this is managed automatically and you can periodically check the performance, weekly, monthly or even yearly at your convenience.
Client Overview Example
This article was inspired by current MAM client who was traveling back to the States from Turkey. He had dabbled in trading and was interested in learning the process of how to successfully trade various investment instruments with profits. After experiencing the stress associated with trading and taking marginal profits, he came to the conclusion that having a money manager would be a superior alternative. Coincidentally, he ran into our CEO, Angel Mondragon, and discovered our MAM services and reviewed the performance that we had produced so far. Interested, he decided to take a leap of faith and explore the potential opportunity.
We are not financial advisors and none of this information should be misconstrued as financial advice. We strongly suggest that you consult your personal financial advisors. We suggest that you continue the research before coming to a decision even if this article is considered a portion of your research.
To stay up to date on new articles, send us feedback or suggestions, join our community chat here.