Invest to Save: The Smart Way to Grow Your Wealth Automatically

The US Consumer Savings rate has been around 5% for the last 10 years.

Income Operators need a higher savings rate than 5%. So what do we do?

We automate savings via aggressive investing.

Imagine a scenario where instead of leaving your income to the whims of your spending habits, you divert a significant portion - say, 25 to 50% - directly into investment platforms like eTrade and Betterment.

Let's break this down. Let’s say your post-tax income is $50,000.

You could channel $10,000 into a taxable brokerage account with eTrade. Then another $10,000 could find its place in Betterment, distributed among various portfolios such as the Safety Net, Cash Reserve, and a Taxable Discretionary account. This strategy is not merely about storing money away; it’s about growing your wealth.

The approach of putting a substantial part of your income into these investment accounts can have a compounding effect on your net worth, particularly when paired with high-income streams. This method transforms the often daunting task of savings and budgeting into a dynamic process of wealth accumulation.

Moreover, automating your investments could lead to a more disciplined financial lifestyle. By reducing reliance on credit cards and channeling funds automatically into investment accounts, you create a financial structure that is easier to manage and execute. Any credit card balance must be paid off each month and you can continue to spend the remaining money you have in your personal checking as you always have.

You can automate your investing via brokerages such as Betterment and eTrade very quickly. Once you have these accounts set up, turning on the automated recurring transactions is straightforward.

The idea of automating your savings by directly investing a portion of your income can be a game-changer in your personal budgeting process. It’s a straightforward yet powerful strategy that capitalizes on the benefits of compound interest and investment growth while leveraging modern tech workflows to simplify this piece of the personal finance puzzle.