The new year is a great time to set the stage for financial success and launch your journey to financial freedom and independence. Imagine a life where your money works for you, providing the freedom to live on your terms and retire early and comfortably. In this blog, I’ll share the key steps to make this the year you take charge of your financial destiny. Read on to discover how automated investing will put you on the path to financial independence.
The Power of Investing Made Easy
1. Understanding the Basics: Financial Independence
Financial independence is the cornerstone of a secure and fulfilling life. It’s about having the resources to live comfortably without being tied to a paycheck. One of the most effective ways to achieve this is through smart investing. Thankfully, you don’t need to know much about investing to reap the benefits. With low-cost investment houses like Vanguard, you can take advantage of the stock and bond markets without incurring large fees that would eat away at your investment returns like a mouse munching a piece of cheese.
What is financial freedom? Having enough money or income streams that work becomes entirely optional. Or at least, enough money that you could switch to doing a career that you find fulfilling and rewarding without worrying about whether it generates enough money to support you. (I’m a big fan of finding a fulfilling career that is challenging and stimulating for a whole host of reasons, keeping your brain engaged is just one of them, but that’s another topic).
2. Automated Investing: A Game-Changer
The world of investing can be overwhelming, especially for beginners. However, with the rise of technology, automated investing has emerged as a game-changer. This approach involves using robo-advisors or automated investment platforms to manage your investment portfolio. By doing so, you can eliminate much of the stress and time associated with manual investment decisions.
3. Why Automated Investing?
Automation simplifies the investment process, making it accessible to everyone. Whether you’re a seasoned investor or just starting, automated investing offers several advantages:
Consistency: Set up automated contributions to your investment accounts, ensuring a consistent approach to saving and investing.
Diversification: Robo-advisors automatically diversify your portfolio, spreading your investments across different asset classes for a balanced, risk-appropriate strategy.
Time-Saving: Say goodbye to the time-consuming task of tracking markets and making constant investment decisions. Automated systems handle the heavy lifting for you.
Emotion-Free Investing: Remove the emotional aspect from investing. Automated systems follow a predetermined strategy, unaffected by market fluctuations or emotional reactions.
Practical Steps for a Wealthier New Year
4. Maximize Your Employer’s 401K Match
If your employer offers a 401K match, take full advantage of this benefit. It’s essentially free money that can significantly boost your retirement savings. Automate your contributions to ensure you never miss out on this valuable perk. If you aren’t sure what to do, call your human resources department and set up an appointment with them to set it up. If you are a self-employed business owner, you can talk to your accountant about setting up your own 401K (again I use Vanguard for my business 401K as well as my IRAs). For international readers, Vanguard is also available in many countries, including the UK.
5. Review and Optimize Your 401K Investments
Take a closer look at your 401K investments. Ensure they align with your financial goals and risk tolerance. If you’re unsure, consider consulting with a fee-only fiduciary financial planner to create a personalized plan.
6. Meet with a Fee-Only Fiduciary Financial Planner
Speaking of financial planners, a fee-only fiduciary is your ally in crafting a customized financial plan. Their commitment to acting in your best interest ensures unbiased advice. Schedule a meeting to discuss your goals, assess your current financial situation, and create a roadmap to financial independence. You can search for a fee-only fiduciary financial planner at NAFPA.
7. Explore Passive Income Strategies
Beyond automated investing, consider exploring passive income strategies. This could include real estate investments, dividends from stocks, or creating an online side hustle or lifestyle business. Or, finally writing that book! Diversifying your income sources can accelerate your journey to financial freedom.
The Heart of Financial Independence: FIRE Course
To deepen your understanding and commitment to financial independence, consider enrolling in our Financial Independence, Retire Early (FIRE) Course. This comprehensive, self-paced online course covers the essential principles of FIRE, offering practical insights, real-life success stories, and actionable steps to fast-track your journey to financial freedom.
Overcoming Procrastination
I get it – life is busy, and finding time to set up automated investing might seem like just another item on an already overloaded to-do list. However, the key to success lies in overcoming procrastination. Start by breaking down the process into manageable steps. Set aside a specific time on your calendar to initiate automated contributions to your investment accounts. Treat it as a non-negotiable appointment with your financial future. Your future self will thank you! Remember, the sooner you start, the more time your money has to grow. If the sheer thought of managing investments feels daunting, consider exploring user-friendly robo-advisors such as Empower or Vanguard which make the entire process seamless.
By conquering the procrastination hurdle, you’re not just setting up automated investing – you’re setting yourself up for financial success. Just do it – your future self will thank you.
Your Path to Prosperity
In sum, investing made easy through automation is a key step on your path to financial independence. Start the year strong by maximizing your employer’s 401K match, reviewing your existing investments, and seeking guidance from a fee-only fiduciary financial planner. Embrace the power of automated investing to simplify your financial journey and set yourself up for a wealthy and fulfilling future.
Remember, financial freedom is both a destination and a journey that takes time and patience. By taking these practical steps and embracing the ease of automated investing, you’re well on your way to creating a life where your money works for you. Cheers to a prosperous and financially independent year!
- Full disclosure: I personally use Vanguard’s automatic investing service and it is super easy to set up. Once you’ve set it up, it is also easy to change if you need to. If you are new to investing, talk to their helpful people who don’t work on commission. Vanguard is the only investment house that can keep their fees super low because you, the investors are the owners instead of having shareholders who own the business and take a share of profits. Read this article about why Vanguard is different (and better IMHO).
- Empower (formerly Personal Capital) is an easy way to track your investments, and if you sign up, Lifecoach.com gets a small payment that goes to charity.
- Financial Independence Retire Early (FIRE) Course.
