Resolved: Automate

Mike Zaccardi

WHEN I WAS WORKING fulltime, my 401(k) and health savings account contributions were automatically pulled from my biweekly paycheck and dumped into the respective accounts. But when I left the nine-to-five world a year ago, the onus fell on me to invest the profits from my small business. I sent off money to some low-cost funds a few times during 2021, but it wasn’t as regular as it should have been.

My resolution: Make my taxable account investing more automated this year. I know I’m a poor market-timer, so I don’t want to even think about buying the dips or jumping on a momentum trade. I’d rather just spread out my contributions over the course of the year.

I suspect many other folks could also benefit from putting their investment plan on autopilot. For retirees, automating distributions can take the mental anxiety out of the sell decision. Meanwhile, those in the workforce might automate their IRA contributions. It’s a whole lot easier to hit the $6,000 maximum contribution if you do it in automatic $500 monthly increments. For those age 50 and older, the 2022 max is $7,000, or just over $580 a month.

In 2021, I didn’t have the tax losses needed to max out the $3,000 offset against ordinary income. If I’d put money to work each month last year, surely there would have been at least a couple of lousy taxable-account purchases on which I could have booked losses and thereby captured that $3,000 tax benefit. Another of my 2022 resolutions: Harvest tax losses during this year’s market pullbacks.

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