Automate Your Investing

Automate Your Investing

7 Min.


Embarking on an automated investment journey can streamline and enhance the process of wealth-building. Automating the investment process minimizes the risk of overlooking fund allocations, ensuring seamless transfers from your income directly into designated accounts like your 401(k) or investment portfolio. Whether you're a novice investor or an adept options trader, leveraging automated investment strategies is an essential approach for compounding your investment portfolio. This guide is tailored to assist you in delving into various avenues of automation, ranging from reinvesting dividends to setting up routine transfers to a robo-advisor.

How to Automate Your Investing: A Step-by-Step Guide

Streamlining your investment process through automation is a straightforward and efficient endeavor. Begin by familiarizing yourself with the platform's FAQ pages to understand account minimums and any necessary approvals for automated investing. Subsequently, gather pertinent information, including your bank details and Social Security number, before initiating the account setup process, which will be guided step by step by the investment platform.

Key Steps in Setting Up Your Automated Investment Account

  1. Establish Your Investment Account: Choose a user ID and password, and specify the account type, be it a taxable investment or an IRA account. Advanced traders seeking leverage in swing trading may require preliminary approvals for certain brokerage accounts.
  2. Asset Selection: For robo-advisors and micro-investing apps, respond to inquiries about your goals, risk tolerance, and time horizon. The platform will then autonomously select suitable assets. Workplace retirement accounts offer a curated list of investments, while self-directed accounts provide many options. Educational sections on the platform often feature informative articles to aid in your investment decisions.
  3. Link Your Funding Account: Designate your checking or savings account for fund transfers, providing the financial institution's name, bank routing number, and your account number. In the case of a 401(k), 403(b), or 457 account, this step is unnecessary, as funds are automatically transferred from your paycheck to the retirement account.
  4. Set Your Funding Schedule: For robo-advisors, round-up apps, and self-directed accounts, determine the frequency and amount of fund transfers from your bank account to the automated investment account. In workplace retirement accounts, ensure your transfer is substantial enough to benefit from the employer match and be mindful of the 401(k) maximum contribution limit.

Exploring Diverse Automated Investment Strategies

Discover various avenues for setting up automated investment plans, ranging from robo-advisors to employer-sponsored retirement accounts like 401(k)s. Opt for one or more automated investment types to transform today's earnings into future wealth.

  • Robo-Advisors: Explore low-fee options offered by robo-advisors such as Wealthfront, Betterment, Fidelity Go, and Schwab Intelligent Portfolios. Outline your goals and timeline, and the digital investment manager will craft a tailored investment portfolio. Initiate auto transfers into your chosen account, be it taxable or retirement, and maintain personalized investment allocations. Some robo-advisors also extend additional services, including access to human financial advisors.
  • Employer-Sponsored Retirement Accounts: Leverage retirement savings through employer-provided options like 401(k), 403(b), or 457 accounts. Allocate a percentage of your paycheck to be transferred into the account, potentially with an employer-matched contribution. Invest in selected stocks, bonds, or balanced funds within the account, allowing tax-free growth.
  • Dividend Reinvestment Plans (DRIP): Capitalize on the option within your investment account to automatically reinvest dividends and capital gains payments in the same asset. This compounding effect accelerates your account's value growth.
  • Recurring Transfers: Instruct your bank to regularly transfer a designated amount from your checking or savings account into your investment account. These funds can be automatically directed into taxable investment, retirement, or any financial account on a daily, weekly, monthly, or other recurring schedule, ensuring prudent management to avoid overdrawing the linked account.
  • Rounding Up: Engage with round-up micro-saving and investing apps like Acorns by linking your debit and/or credit card. Select a round-up amount from the next dollar, with the option to multiply it up to 10 times. With each card transaction, the round-up amount seamlessly transfers into your investment account.

Navigating the Onboarding Process for Automated Investing

Begin by understanding the essential information needed to initiate an automated investing account.

Personal Details

To complete the onboarding process, provide the following personal information and documentation:

  • Name
  • Social Security number (or taxpayer identification number)
  • Address
  • Telephone number
  • Email address
  • Date of birth
  • Driver's license, passport information, or details from other government-issued identification
  • Employment status and occupation
  • Brokerage firm employment status
  • Annual income
  • Net worth
  • Investment objectives and risk tolerance

Minimum Deposits

Numerous automated investment accounts cater to investors with low minimum deposit requirements. Minimum deposits vary widely, ranging from zero for established investment brokerage firms to $100,000 for the comprehensive Empower robo-advisor, providing access to certified financial planners.

If you are a novice investor, consider major brokerage firms like E*TRADE, Fidelity, or Charles Schwab, which have no minimum investment requirements. Alternatively, for robo-advisors with low minimums, options like SoFi Automated Investing, M1 Finance, Betterment, Ally, and Ellevest all require less than $100 to commence your investment journey.

Key Considerations Before Setting Up an Automated Investment Account

Streamlining the investment selection process can be challenging with a multitude of automation options. To simplify this decision, carefully assess the following factors:

Customer Support

Phone customer service plays a pivotal role for both novice and seasoned investors. It's crucial to note that some platforms lack live customer service. If human interaction is essential to you, investigate the availability and contact times of live customer support.

Fees and Commissions

Extensive research, including studies from Vanguard, highlights a direct correlation between lower fees and enhanced investment performance. Before committing to any platform, comprehensively understand the fees involved, encompassing management fees and fund expense ratios. Evaluate whether the services provided justify the associated costs.

Account Minimum

Examine the initial and ongoing balance requirements for opening and maintaining the account. Assess whether the minimum balance aligns with your financial situation.

Research Tools

For self-directed investment accounts, scrutinize the available screeners, calculators, trading platforms, and research reports. If you identify as a self-directed investor, ensure that the research tools align with your specific needs before initiating the account.

The Essence of Automated Investing

Automated investing serves as a systematic approach to consistently save and invest for the future, addressing the common tendency to neglect well-intended financial goals. Ideal for those aiming to transform current earnings into future prosperity, this strategy proves effective for various objectives such as retirement, education funding, general wealth accumulation, and goals exceeding a five-year horizon.

To implement automated investing, follow these straightforward steps. First, choose a source such as a paycheck, personal checking account, or savings account from which investment funds will be obtained. Subsequently, choose the investment destination, whether it's a workplace retirement account, a self-directed investment account, a micro-investing app, or a robo-advisor. The concept extends to reinvesting dividends and capital gains within your brokerage account.

Specify your investments and establish a routine transfer from the cash account to the investment account. Tailor the amount and frequency of your auto investment strategy according to your preferences. Once activated, funds will seamlessly transfer into the designated accounts and investments automatically. This automated process not only streamlines the investment journey but also mitigates the temptation to halt investing during market downturns. In fact, it positions you to capitalize on a fundamental investment principle: "Buy low" when markets experience declines.

How Automated Investing Works

Conceptualize automated investing as akin to automated bill pay, where predefined parameters dictate the invested amount, investment vehicles, and funding method. Once configured, routine transfers from your bank account or paycheck seamlessly channel into your investment accounts, streamlining the contribution process. For self-directed accounts, an additional step may involve strategically deploying these funds unless utilizing pre-built portfolios from the brokerage. Alternatively, automated investment portfolios through a robo-advisor offer a hands-free approach, automatically aligning contributions with predetermined allocations and rules established during the account setup.

Assessing Risks of Automated Investing

Engaging in financial market investments inherently carries risk, as the initial investment's value may fluctuate. Surprisingly, automated investing could be perceived as less risky than self-directed investing. Consistent injecting funds into financial markets, irrespective of market trends, embodies dollar-cost averaging. This strategic approach facilitates the acquisition of more shares at lower prices and fewer shares at higher prices, effectively implementing the "buy low" principle.


Automated investing streamlines wealth-building for investors of all levels. This guide covers setting up automated investments and exploring options from robo-advisors to retirement accounts. It underscores crucial factors like customer support, fees, and research tools in platform selection. Automated investing operates seamlessly, akin to automated bill pay, mitigating risks through dollar-cost averaging. Overall, it positions investors to capitalize on market fluctuations while ensuring a straightforward and efficient investment journey.

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