May 10

Automatic Investing


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Today I setup an Automatic Investing plan with Capital One Investing. Looking back at my 2016 goals, I set a target of $50,000 of new capital to be invested this year. This is a stretch goal for me, but it is attainable if I don’t encounter unexpected costs throughout the year.  I set the same goal last year, but failed to achieve it. I came close, but ended the year with $44,257 of new capital invested. While reviewing my 2016 goals, I realized that I’m falling behind again this year. In fact, I’m way behind. I needed to do something to help push me closer to the finish line. So I introduced Automatic Investing to my portfolio strategy. Automatic Investing along with a monthly minimum dollar amount invested should get me to $50,000 by years end. This post explains what I’m auto investing in and calculates the remaining dollar amount needed on a monthly basis to achieve this goal. I don’t want to fail at this goal two years in a row.

Automatic Investing Plan

It turns out that I have a handful of good stocks that are under or at value in my personal brokerage account. I’ve decided to auto invest $1,000 a month, not into new stocks, but adding to existing positions. My brokerage account has the following stocks: Cisco (CSCO), General Electric (GE), Altria Group (MO), National-Oilwell Varco (NOV), Qualcomm, Inc. (QCOM), Royal Bank of Canada (RY), Toronto-Dominion Bank (TD), Union Pacific Corp (UNP), and Wal-Mart Stores (WMT). I will likely adjust my monthly investment amounts based on which stocks are the most undervalued, but this month I just invested $200 into five companies. My purchase totals today are:

  1. Walmart – 2.85 shares at $68.85 a share
  2. Union Pacific – 2.27 shares at $86.48 a share
  3. Qualcomm – 3.88 shares at $51.57 a share
  4. Toronto-Dominion Bank – 4.53 shares at $43.27 per share
  5. Royal Bank of Canada – 3.31 shares at $59.29

Total amount spent was $1,000, however Capital One Investing charges $3.95 per transaction, so the total invested amount is $980.25. Total expenses were $19.75. In percentages, 1.98% of each transaction is fees. These new stocks will add a whopping $8.73 to my annual dividend income.

Why Am I Automatic Investing

I’m not a fan of auto investing, but it’s easy to do and my trading fees are reduced from $6.95 to $3.95 per transaction. I’m doing this from now until the end of the year as a way to force more money into my portfolio. I’ll revisit this strategy at the end of the year and decide at that time if it makes long-term sense for me to continue. Right now it makes sense, because most of the stock in my Capital One account are in my buy zone.

How Will Automatic Investing Help Me Reach My Investing Goal

Set it and forget it. Automatic Investing helps me with out of sight, out of mind. It’s something that just happens.

So far this year I’ve invested new money into the following areas:

  • Personal Brokerage Account – $1,238 (this includes today’s $1000 transaction)
  • Two Roth IRAs – $11,000
  • My 401k – $5,979.88
  • Acorns – $444.99 ($100 a month auto invested)

The total invested amount equals $18,662.87. This leaves $31,337.13 to be invested by the end of this year to hit $50,000.  By auto investing $1,000 a month over the next 7 months and accounting for Acorn investments, the remaining amount needed to invest is $23,637.13.

Breaking this down to a monthly strategy ($23,637.13 / 7 months) = $2,954.64. This is the average amount I need to invest to hit $50,000. Subtracting even further, my 401k is set to pull money each month and it will end at $18,000. $18,000 minus $5,979.88 = $12,020.12. This will be auto invested (as long as I don’t get fired). So I’m removing this from my monthly number. $23,637.13 minus $12,020.12 equals $11,617.01. This number divided by 7 equals $1,660 a month.

It will be close, but I think I can commit to adding $1,660 a month until the end of the year.

Final Thoughts

As I mentioned, Capital One trading fees are reduced on auto investing plans. However, this month I bought 5 stocks, so my fees were high. Moving forward, I’ll buy fewer stocks to cut these fees. the fees can be as low as $3.95 per $1,000 invested. If I can keep the monthly investment under two stocks, it’s a $7.90 transaction fee. I can live with this.

Do you auto invest? What do you think of auto investing? Did you set a goal to invest a certain amount this year?


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