Let’s face it, being disciplined is hard work. Whether you’re sticking to a diet by avoiding donuts, committed to finishing those house renovations before your parents arrive to stay for a month (what were you thinking?!), or reaching your financial goals…building a routine ain’t easy. That’s why every once in a while, we all need a proverbial kick in the pants to keep us motivated.
Investing is no different and one way to stay on track to reach your financial goals is to invest a set amount into your Clover account every month. Need some convincing? Here are five reasons why we think you should set a monthly investment goal —and stick to it.
It helps you become more disciplined
Setting a monthly goal is a great way to keep yourself accountable with your finances. When you put your money to work by investing, you’ll have less temptation to spend it. You’ll find that not only are you saving more money, you’ll actually be needing less to live on – which can be doubly powerful.
If the market is going down, you get more for your money
If you’re investing regularly, there’s a silver lining if the market dips – you’re buying while there’s a sale on! This buying low strategy is also known as “dollar-cost averaging”. It can be advantageous for investors who have the time and temperament to harness its power.
Your portfolio will be rebalanced more often
Over time, all portfolios will “drift” from their initial composition (the nerd term being “Strategic Asset Allocation”). When you invest regularly, we’ll periodically determine the right amount of each investment to top-up. Rebalancing helps to smooth out your investing returns by taking profits from certain assets that have gone up and putting them in other assets that have merit but haven’t risen as much. This also helps to optimise your returns and minimise your risk.
It’s free for Clover customers
If you use Clover, you don’t need to pay brokerage fees every time you purchase new investments. So, there are no additional fees for investing often. We don’t think you should be penalised for doing the right thing by your future self.
It can make a big difference on your returns
Regular contributions are subject to compound interest – returns on an amount of money that generates returns on itself. This can have a powerful affect on your returns. If you’re not familiar with this concept then it’s well worth taking a read about it here.
Just like getting six pack abs needs a regular routine, so it goes with reaching investment goals. That’s why investing a set amount every month, will help keep you on track. Plus, you can enjoy eating that pizza without feeling any guilt.
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