Investing is a long term game. Understanding how to take advantage of your most precious resource–time–is critical in building your investment strategy. Whether it’s time holding investments or time spent managing your portfolio, each investor must determine how they want to approach their wealth building.
Already juggling work, family and other commitments, most Americans prefer to find passive ways to build long term wealth, while staying in control of their portfolio. Here are five ways to turn your investments to auto-pilot, taking advantage of services and technology that enable you to monitor and adjust whenever you need to.
Hiring a Financial Advisor
This is perhaps the most traditional and popular of options for investors looking for a fully managed, hands-off approach to investing. Hiring a professional is often a good idea for anyone who doesn’t feel comfortable or doesn’t have time to manage their own portfolio. Note that it can be a more costly option as advisors will charge a management fee, typically around 1% of your portfolio. For some, the cost is well worth the peace of mind.
Service of a financial advisor offers a one stop shop for the passive, long term investor. They will take care of all upkeep such as rebalancing, asset allocation as well as helping ensure you pay the least amount come tax time. Your advisor will sit down with you and go over your goals, assess your risk tolerance and structure your investments in accordance with how aggressive you desire to be.
Automated Investment Into Retirement Plans: 401(k) & IRAs
The simplest and most common way to automatically invest for retirement is through employer-sponsored or individual retirement plans. These are attractive options to the passive, long-term investor as he or she simply has to select how much of their paycheck or salary they want contributed each pay period. Some employers will even offer matching to each contribution, which provides an extra incentive to contribute on a regular basis.
Exchange Traded Funds (ETFs)
Picking specific financial assets to build a well diversified investment portfolio can be complex and time consuming. ETFs are a type of security consisting of a curated collection of securities that track an underlying index. The types of underlying indexes can range from entire market indices to specific sectors.
ETFs are similar to mutual funds, but differ in that they are listed on exchanges and ETF shares trade throughout the day like an ordinary stock, allowing an investor to buy or sell their positions when markets are open. Rapid diversification and automatic risk management come as the most attractive ETF features to the passive investor. The ETF fund manager is responsible for selecting and managing the assets in the fund, so you don’t have to.
Robo-advisors are a growing investment strategy trend. They are a class of online financial advisors that provide financial advice or investment management through fixed strategies with minimal human intervention. Robo-advisors provide financial strategies based on mathematical rules or algorithms through automation. They typically collect information from clients about their financial situation and future goals, then use the data to automatically invest client assets based on these criteria.
Alternative Funds With Automated Contributions
There are several alternative asset funds that enable automated contributions to allow for continued investment and growth. The difference with other investment platforms with automatic investment is that these investments provide access to a unique type of asset that is outside of the conventional stock and bonds market. These allow investors to grow their portfolio passively while balancing their investments.
DiversyFund is an example of such a platform, offering the ability to invest in private real estate through an easy platform. Investors who are looking for long term, passive diversification have the option to enable monthly contributions to their account. The fund is fully managed by our team so investors can rely on our expertise to curate and manage a portfolio of high quality assets.