Put money making on auto pilot and sleep easy

TECHNOLOGY and automation are delivering Australians new ways to earn money while they’re sleeping.

There has been rapid growth in savings and investment products that allow people to build wealth with a few taps of their smartphone or keyboard, then let the power of compound interest do its work. These auto pilot tips will help you get rich.

ROUNDING UP

Fast-growing financial technology company Raiz automatically moves its clients’ spare change to an investment portfolio or superannuation. It rounds up every transaction to the nearest dollar, and now manages more than $270 million of funds, up 60 per cent in the past nine months.

Raiz managing director George Lucas said the minimum investment was $5 and signing up could take less than five minutes.

Mr Lucas said one of the biggest hurdles to start saving was people believing it would affect their lifestyle. “Having money come automatically out of your account into an investment or savings account regularly and in small amounts means people learn to save and realise they can save without affecting lifestyle,” he said.

SUPERANNUATION

Super is the granddaddy of automatic investing.

“In the 1990s the government realised that automatic investing was a great idea and made superannuation an automatic investment that happened before you received your take home pay,” Mr Lucas said. He said making voluntary super contributions was a great way to grow wealth.

Your super is locked away until you reach retirement age which, for most, means 30 or 40 years of compounding returns.

ETF EVOLUTION

Exchange-traded funds have exploded in popularity in the past decade. They are lowcost funds – traded on the stock exchange – that spread investors’ money over a specific index or asset class such as global shares, corporate bonds or even robotics. This automatic diversification saves investors time and shields them from volatility, and their reinvested income delivers a valuable compounding effect.

Asset manager Legg Mason Australia’s managing director, Andy Sowerby, said ETFs had evolved beyond index funds that passively invested money, and several today were actively managed. “There is a large amount of choice and, through technology, that is more accessible than ever,” he said.

“Our survey of 17,000 direct investors has found technology adoption is very high, and we have found investors will use more technology in the future,” Mr Sowerby said.

SAVINGS BOOST

It’s not only investments that benefit from the new wave of automation.

ING has an everyday roundup tool, which enables many card transactions to be rounded up to your choice of the nearest $1 or $5.

So for a purchase of $16.50, $3.50 will be rounded up and moved to your savings account, collecting a higher interest rate, or used to pay down your existing home loan faster.