Industry / Tech/BioTech

How to Automate Your Investments

  • Declan O’Flaherty

    Declan holds a Bachelor of Commerce from the University of Alberta and has over 4 years of experience investing in financial markets. As a fundamental investor, Declan embraces the investment principles of Warren Buffett and his disciples. This puts a focus on finding businesses with healthy financials, competent and accountable leader, enduring competitive advantages, and those that are selling at discount to what they are worth.

    View all posts

Investing is one of the easiest and most effective ways to create long-term wealth and early retirement.

However, most people do not have the time or expertise to fully dedicate themselves to such an activity.

In that case, it may make more sense to seek out a professional to manage your investments for you.

But what if you want control of your portfolio and the decisions you make with your money?

If so, you may want to find a strategy that allows you to make the most of your money without spending too much time on the research and evaluation required to be a successful investor.

Fortunately, there is a way to save your time without jeopardizing your investment returns.

In this article, we will outline a few strategies on how you can automate investing.

Get ready to compound your wealth without the hassle of doing extensive research and asset selection.

It’s time to take control of your financial future.

What Does It Mean to Automate Your Investments?

An automatic investment plan is a simple and effective way to automatically invest your money regularly without manual intervention.

It involves arranging for funds to be automatically transferred from your bank account to your investment account on a predefined schedule.

This automation ensures a consistent and disciplined approach to investing, making it easier for you to stay on track with your financial goals.

What to Consider When Automating Your Investments

If you want to automate your investing, it is worthwhile taking the time to understand how this strategy can impact your financial goals and portfolio returns.

Here are some valuable factors to keep in mind:

  1. Financial Goals

First and foremost, clearly define your short-term and long-term financial objectives.

Tailoring your investment automation to support these goals, whether it’s saving for retirement, a down payment, or funding your children’s education, sets you up for success.

The goal is to create a strategy that meets your needs without compromising on lifestyle or mental well-being.

  1. Risk Tolerance

Risk Tolerance Scale | PAi

Image By: PAi

Assess your risk tolerance, which reflects your ability and willingness to handle fluctuations in your investments’ value.

Your risk tolerance plays a vital role in determining your asset allocation and investment options for automation.

Essentially, you want to be able to sleep easy at night knowing that your money is in good hands and growing in a sustainable/predictable way.

  1. Asset Allocation

Finding the right asset allocation is key.

A mix of different asset classes, like stocks, bonds, and cash, should align with your risk tolerance and financial goals.

Set your investment portfolio up so that you can maximize your investment returns without taking on too much risk.

Investing is a long-term game that requires patience and careful planning.

  1. Investment Options

Choose the investment vehicles that suit your asset allocation and risk profile.

Whether it’s individual stocks, mutual funds, exchange-traded funds (ETFs), or robo-advisors, choose the best assets based on your preferences and level of involvement.

If you are someone who wishes to play a more active role in your investments, perhaps individual stock picking is the way to go.

However, if you prefer a strategy that requires less work and active involvement, then mutual funds, ETFs, and robo-advisors will help you achieve your objectives more practically.

  1. Automatic Contributions

Active vs. Index Fund Returns Over Past 10 Years | CNBC

Image By: CNBC

Decide on the amount and frequency of your automatic contributions.

You can even set up automatic payroll deductions through your employer-sponsored retirement accounts.

By implementing something like a dollar-cost averaging strategy and contributing a fixed amount regularly, you can smooth out market volatility and potentially improve your average purchase price over time.

In the end, most active fund managers underperform the market, and so oftentimes, a solid DCA strategy into index funds is all you need for long-term investment success.

Heck, even Warren Buffett recommends this strategy to most investors.

  1. Contribution Limits

Be mindful of contribution limits for tax-advantaged accounts like TFSAs, RRSPs, IRAs, and employer-sponsored retirement plans.

Staying within these limits maximizes the tax benefits of your automated contributions.

More importantly, exceeding the limits of these tax-advantaged accounts brings on unwanted expenses making it quite costly for those who go over.

Always pay attention to your current contributions and how close you are to reaching that contribution limit.

The last thing you would want is to find out you surpassed the limit and are being charged a hefty interest.

  1. Emergency Fund

Before diving into investments, make sure you’ve established an emergency fund.

This fund should cover unexpected expenses, providing you with financial security and avoiding the need to liquidate investments during a difficult time.

You want to feel in control of your finances, and the best way to achieve that is by sticking within your financial means.

  1. Rebalancing Strategy

Passiv Dashboard | IEX Cloud

Image By: IEX Cloud

If your investment portfolio includes multiple assets, consider how you will rebalance it over time to maintain your desired asset allocation.

Some investment platforms offer automatic rebalancing features, such as Passiv, Acorns, or Charles Schwab Intelligent Portfolios.

All of these are great tools that will help take the stress out of rebalancing your portfolio by using robo-advisors, or human financial advisors, to help build and manage your portfolio.

  1. Fees and Costs

Always evaluate the fees associated with your chosen investment options and automation platform.

Lower fees can significantly impact your long-term returns, so it is important to be cost-conscious.

In general, the more trading one does, the higher expenses you will incur.

Moreover, if you plan on using an automation platform, you may experience additional fees depending on the make and model of your investment advisor.

  1. Monitoring and Review

Even with automation, it’s crucial to regularly review your investment performance and make adjustments when needed.

As life circumstances and financial goals evolve, you should frequently check in to ensure that your objectives are being met.

You’d be surprised how things change as new developments unfold in your life and investment journey.

  1. Seek Professional Advice

If you are ever unsure or new to investing, it is worthwhile speaking to a financial advisor who can help you make informed decisions based and set up your account to suit your needs.

It is better to be certain, and seeking professional advice is one of the best ways to ensure that you have exposed yourself to all of the considerations when automating your portfolio.

What are the Benefits of Automating Your Investments?

As a passive investor, automatic investments present a myriad of opportunities that can positively transform your financial journey.

Here are ten reasons why automatic investing should be on your radar:

  1. Consistency and Discipline

With automation, you establish a consistent schedule to contribute regularly to your investment accounts.

This disciplined approach ensures that you never miss a contribution, keeping you firmly on track to achieve your savings and investment objectives.

  1. Time-Saving

Once you’ve set up automation, you liberate precious time that would otherwise be consumed by manual investment management.

Embrace the freedom to focus on other essential aspects of your life while knowing that your investments are working for you all of the time.

  1. Emotion-Free Investing

By automating your contributions, you gain the advantage of removing emotions from your investment decisions.

Say goodbye to impulsive choices influenced by short-term market fluctuations or fear and greed.

Instead, enjoy a more rational and well-thought-out investment strategy.

  1. Dollar-Cost Averaging

Dollar-Cost Averaging | Tokenist

Image By: Tokenist

Harness the power of dollar-cost averaging with automated regular contributions.

Embracing this time-tested strategy, you can buy more shares when prices are low and fewer shares when prices are high, potentially enhancing your overall average purchase price and navigating market volatility with confidence.

  1. Reduced Market Timing Risk

Eliminate the daunting task of trying to time the market.

Automation nullifies the need for market-timing strategies, empowering you to benefit from the long-term growth potential of the market.

  1. Financial Goal Alignment

Customization is the key to automated investments.

Tailor your contributions precisely to align with your unique financial goals and risk tolerance.

Whether you’re saving for retirement, a down payment, or funding your children’s education, automation caters to your specific aspirations.

  1. Diversification and Asset Allocation

Automation opens the gateway to effortless diversification across various assets or asset classes.

With ease, you can maintain your desired asset allocation over time, reinforcing prudent risk management within your portfolio.

  1. Tax Efficiency

Improvement by Using a Tax-Deferred Account | T. Rowe Price

Image By: T. Rowe Price

Embrace automation’s tax-saving prowess, especially in tax-advantaged accounts like TFSAs, RRSPs, IRAs, and employer-sponsored retirement plans.

Your consistent contributions to these accounts unlock valuable tax benefits for your long-term financial gains meaning more bang for your buck.

  1. Reinvestment of Dividends

Many automated investment platforms offer automatic reinvestment of dividends and capital gains.

This drip investing feature is a powerful tool that compounds your returns over time, maximizing your growth potential.

  1. Peace of Mind

Enjoy the reassurance that your investments are diligently managed in a systematic and professional manner.

Embracing automation provides you with peace of mind, alleviating stress related to financial decisions and fostering a confident and secure outlook on your financial future.

Steps On How to Automate Your Investments

Now that you understand the benefits of automating your investments, it is time to discuss the steps to making it happen.

Here are seven steps to build an automated investing plan.

Step 1: Create a Budget

Start by developing a budget to gain a clear understanding of how much you can comfortably allocate to investing regularly.

This budget will serve as the foundation for setting up your automated contributions, ensuring that your investment journey remains financially sustainable.

Step 2: Choose Your Investment Accounts

Types of Investment Account (US) | Level Financial Advisors

Image By: Level Financial Advisors

Next, carefully select the investment accounts that align best with your unique financial goals while also offering automation features.

You have a range of options at your disposal, including an individual brokerage account, a workplace retirement account, and an individual retirement account.

Pay attention to the tax benefits of each account to ensure that you are maximizing your returns.

If you have the opportunity to use a tax-efficient investment account, it is ideal for you to max out that savings account first before moving forward with the alternatives.

Step 3: Set Up Automatic Contributions

Now, let’s take action! Link your bank account to your chosen investment accounts and set up an automatic transfer on a regular schedule, be it monthly, bi-weekly, or whatever suits your preferences.

These scheduled transfers will diligently fund your investment accounts with the budgeted amount, taking the guesswork out of contributing consistently.

Step 4: Implement Dollar-Cost Averaging

Embrace the dollar-cost averaging strategy by contributing a fixed amount at regular intervals.

This approach helps reduce the impact of short-term market volatility and smooths out your average purchase price over time.

Step 5: Diversify Your Investments

Various Investment Portfolios | Fidelity Investments

Image By: Fidelity Investments

Diversification is key to managing risk and enhancing potential returns.

Allocate your contributions across a diversified range of assets or asset classes, encompassing the likes of stocks, bonds, and cash.

This intelligent spread of risk sets the stage for a resilient investment portfolio.

Step 6: Set Up Automatic Rebalancing (Optional)

Should your portfolio encompass multiple assets or investment funds, consider the use of automatic rebalancing.

By implementing this feature, you ensure that your asset allocation remains in line with your desired investment strategy at all times.

Peace of mind is key, and this assures that your portfolio stays optimally balanced, even as market conditions evolve.

Step 7: Monitor and Review

Regularly review your automated investment strategy to ensure it remains aligned with your financial goals and risk tolerance.

Life circumstances may evolve, and so might your investment objectives.

When needed, make informed adjustments to keep your investment journey on track.

Final Thoughts

Congratulations on building your first fully automated investment portfolio!

With these steps and considerations in mind, you are now equipped to create a fully automated investment process that empowers you to build wealth wisely and confidently.

Embrace the journey and watch as your financial assets compound on their own.

There is nothing better than watching your wealth grow as you sit back and relax and enjoy the show.

Welcome to a happier financial life.



We are not brokers, investment, or financial advisers; you should not rely on the information herein as investment advice. If you are seeking personalized investment advice, please contact a qualified and registered broker, investment adviser, or financial adviser. You should not make any investment decisions based on our communications. Our stock profiles are intended to highlight certain companies for YOUR further investigation; they are NOT recommendations. The securities issued by the companies we profile should be considered high risk and, if you do invest, you may lose your entire investment. Edge Investments and its owners currently hold shares in Braxia stock and are compensated by Braxia for Investor Relations Services. Edge Investments and its owners reserve the right to buy and sell shares in Braxia without further notice, which may impact the share price. Please do your own research before investing, including reading the companies’ public filings, press releases, and risk disclosures. The company provided information in this profile, extracted from public filings, company websites, and other publicly available sources. We believe the sources and information are accurate and reliable but we cannot guarantee it. The commentary and opinions in this article are our own, so please do your own research.


Copyright ©️ 2023 Edge Investments, All rights reserved.

  • Declan O’Flaherty

    Declan holds a Bachelor of Commerce from the University of Alberta and has over 4 years of experience investing in financial markets. As a fundamental investor, Declan embraces the investment principles of Warren Buffett and his disciples. This puts a focus on finding businesses with healthy financials, competent and accountable leader, enduring competitive advantages, and those that are selling at discount to what they are worth.

    View all posts

Leave a Comment

Get 30+ hours of analyst research directly in your inbox weekly. Sign-up today to stay on top of the market.