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Learning, Sharing, and Teaching => Investor Alley => Topic started by: shuffler on January 21, 2014, 05:00:41 PM

Title: Automated Investing
Post by: shuffler on January 21, 2014, 05:00:41 PM
Do you use automatic investing (purchases) in your brokerage?
What sorts of features/tools exist at your brokerage to support automation?
Are they very basic, or can you craft interesting "rules" for when to buy?

I have always "paid myself first" by having some portion of my paycheck get directed to my brokerage.  I recently took this to the next level by sending my entire paycheck to my brokerage, and then scheduling an automatic transfer to my checking account to cover monthly expenses.  This is nice b/c (1) bonuses, raises, etc. will automatically accrue in the brokerage rather rather than somewhere else where they're easier to spend, and (2) I can do variable deductions like 401k, ESPP, social-security, etc. from my paycheck while keeping a constant rate of deposits into my checking account.

What I would like to do is to keep an emergency-fund level of cash (money-market) in my brokerage.  Let's say $20k.
As deposits are made into the brokerage, I would like to be able to say "If there is > $22k in the account, then buy $2k of fund XYZ."  This would keep me at my $20k emergency-level, and automatically invest my savings without any manual intervention.

What I've found from my broker (Fidelity) is that I can set up recurring purchases, but they don't work the way I would like them to work.  They are always for a fixed amount, they always happen at a fixed interval, and (worst!) if you run out of money then they'll just keep purchasing on margin.  Yuck!

I'm wondering if the grass is greener elsewhere?

Title: Re: Automated Investing
Post by: Honest Abe on January 22, 2014, 06:04:08 AM
I put a small amount into Betterment weekly.. It's an amount I know I can afford to save. Then on the last day of the month I look at any excess cashI have over our emergency fund and deposit that as well. Works for me! My challenge is to make that end of month deposit as large as possible!
Title: Re: Automated Investing
Post by: ShavinItForLater on January 22, 2014, 05:46:12 PM
The only account I have that works like this is my Health Savings Account (HSA).  It keeps $2,000 liquid earning low/no interest and anything above $2,000 is swept into an investment account, which automatically purchases the fund I've chosen.

In your situation, I think I'd just keep my emergency fund account separate with the $20K in it.  I'd look for a brokerage that can alert me when my balance exceeds a limit (I would guess that's a much easier feature to find), so I'd get an email or text when I hit the $2K limit, and just log on and buy the fund when I got that alert.
Title: Re: Automated Investing
Post by: shuffler on January 23, 2014, 12:04:23 AM
Thanks, both of you, for the feedback.

I guess people haven't "fully" automated their investing as much as I imagined.

I'll look into the alerts for balances-greather-than-$X.

Title: Re: Automated Investing
Post by: Workinghard on January 23, 2014, 04:17:12 AM
I don't do automated, but we're maxed out on my dh's 401k and our Roth IRAs.  On top if that I'm trying to put 2k a month into Vanguard and $500 a month into our sinking car/vacation/new roof fund. I prefer having the control in case unexpected expenses come up like my Dh's recent surgery.
Title: Re: Automated Investing
Post by: Allen on January 23, 2014, 03:54:16 PM might support the type of setup you need.  They were more focused on the weird if/then rules you describe (if >20k then invest $y) but I don't know if it can do your exact case or not.