How To Save & Invest
Setting up an automatic plan starts with checking a box on the account application into which you want funds deposited. You will choose a day each month or week to have withdrawals made from an existing account (savings or checking) and deposited into your destination account. You can set the amount you want to be withdrawn, and you can make changes later on as you see fit.
- THINGS TO KNOW
Consider using direct deposit. - Many stock and mutual fund accounts offer automatic investment.
- You may be able to set up automated transfers from one account to another.
Direct deposit
If your employer offers direct deposit of your paychecks, you can set up an automated withdrawal, where a portion of each deposit goes directly into a savings or other account instead of your checking account. This option allows funds to accumulate before you can spend them on anything else.
Investment accounts
Many stock and mutual fund accounts offer an automatic investment feature. Setting up an automatic plan involves checking a box on the account application. These funds will go to purchase additional shares. Savings bonds can also be purchased in this way, though via a direct deposit plan that holds them as a source of funds until you have enough to purchase an actual savings bond.
After you have chosen this feature, you must provide relevant information about the account that will be debited, such as the account number, routing number, and name of the institution from which the funds will be withdrawn.
If you have online access to your bank or investment accounts, you will usually be able to log in and set up a plan or change its features. Many banks and financial services companies allow you to make such transactions over the phone or in person at a nearby branch if there is one in your city.
Automated transfers between accounts
If you have both a savings and a checking account at the same institution, you may have the option of setting up automated transfers from one account to the other.
Other accounts
There are other sources for automatic withdrawals. The federal government encourages consumers receiving Social Security payments to get their payments via direct deposit, and many states offer child support recipients direct deposit as well.
