As we kick off the new year, we tend to find ourselves reflecting on the previous 12 months and anticipating the year ahead. January is the start of a new year, and for many, considered a natural starting point for change.
In this spirit, this is the perfect time to embrace easy and impactful financial habits in 2024. If you are a long-time investor, then you have certainly come across the 50/30/20 budgeting rule or dollar-cost averaging. But what if we told you that you can do both by committing to one other approach?
Three Birds, One Stone
To recap, the 50/30/20 rule states that your monthly income can essentially be broken down into 50% needs, 30% wants, and 20% savings and investments. Dollar-cost averaging is investing the same amount of money at regular intervals over a period to minimize the impact of volatility and mitigate the risk of investing all your money at a specific price point. A quick and easy way to do both is by automating the contributions to your investments. With automated investments, you can effortlessly:
– Invest 20% of your monthly income (as per the 50/30/20 rule) instead of spending it all
– Invest at regular intervals (dollar-cost averaging)
– Invest on autopilot (automation)
Additionally, this “set-it-and-forget-it” approach helps you avoid making emotional decisions about your finances that can negatively interfere with the growth potential of your investments.
When Should You Start?
As the saying goes, “the best time to invest was yesterday, and the second best time is now”. The same rings true when it comes to adopting financial best practices. Let’s help you get started:
– Calculate 20% or your preferred percentage of your monthly income.
– Enter the amount as a monthly deposit using our investment calculator to see what your investments have the potential to do.
– Try different options until you find the amount that fits your needs.
– Activate the automatic deposits feature with your digital investing partner or set up a standing transfer order with your bank.
New Beginnings
Old habits die hard, and the first step towards change is often the hardest one to take. At SmartWealth, we always aim to empower our clients with the necessary tools and information to make better financial decisions. Following the steps above will help you integrate automation with budgeting and regular deposits, while elevating your investment strategy to reflect the commitment to your future.
Here’s to new beginnings and to a prosperous year ahead.
