In this step-by-step guide, I will walk through the steps to set up automatic investing with E*TRADE. But before I do, I want to highlight the primary reasons I love to use automatic investing to help me reach my $10M FI/RE goal by age 40 .
Dollar-cost averaging (DCA). By consistently investing a fixed dollar amount every week or month, I get the sweet benefit of dollar-cost averaging. DCA is where, instead of investing a lump sum into the market all at once, you spread out that contribution over a period of time in the hopes of reducing the impact of market volatility.
Less stress. So many people are hung up by daily swings in the stock market. To me, that can be very, very stressful. By auto-investing, I don’t have to worry about that. My money just gets invested on a fixed schedule, no matter how high or low the market is. Since my investing horizon is long, I can leave my investments on auto-pilot more or less. I just have to keep an eye on the mutual funds I invest in by tracking their performance over the years and their expense ratios.
Out of sight, out of mind. Most people are tempted to spend money they see. By automatically withdrawing money out of my bank accounts, I don’t have much chance to spend extra income.
Lack of discipline. To invest consistently, one has to be disciplined to transfer money into a brokerage account and invest over time. Most people don’t have the time or habits to do this regularly and, therefore, miss out on potential growth by sitting on idle cash. By auto-investing, I don’t have to think about this anymore; my money just gets socked away into mutual funds on a regular basis.
Now that we know how powerful auto-investing can be, let’s walk through the motions to get it all set up!
Prefer a video walkthrough? Watch the quick tutorial below, or scroll down to follow along with the complete step-by-step screenshots:
E*TRADE allows you to auto-invest into both index funds and mutual funds, unlike Fidelity which currently allows mutual funds. For a list of top picks and asset allocation models, check out our recommended portfolios below:
Compare the classic Bogleheads 3-Fund vs. 100% All-World equities portfolio with exact Vanguard and iShares ETF tickers on our curated cheat sheet.
Login to your E*TRADE account and go to https://us.etrade.com/etx/pxy/automaticinvesting#/ .
Click the “View current plans” button to see your dashboard: It should take you to https://us.etrade.com/etx/pxy/automaticinvesting#/dashboard , where you will see a list of your automatic investment schedules.
Click the “Create new plan” button and select the account you want to set up automatic investing for.
Check the boxes next to each fund you want to invest in, or search for funds you don’t currently own. (Need fund ideas? Check out our Recommended Low-Cost Index Funds & ETFs cheat sheet).
Note
Set a dollar amount for each fund (minimum $25), determine your frequency (weekly, bi-weekly, monthly), and select your funding account. If you are constructing a core long-term portfolio, check the underlying constituent overlap between VOO vs VTI to avoid unintentional double-exposure, or review the VTI vs VXUS vs BND 3-Fund Model for balanced domestic, international, and fixed-income allocations.
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Be careful not to overextend yourself! You can always start small and increase this amount at a later point. The minimum amount you can auto-invest into each fund is $25.
Remember that you can create multiple schedules that are tailored to your financial needs.
Click “Continue” to review your schedule, customize, and finalize it. After your schedule is active, you can edit or pause it anytime.
Congratulations! That’s it. You’ve successfully set up your automatic investments!
Note
Disclaimers
Quick answers to common questions, technical edge cases, and tax rules.
Yes. Unlike brokerages that restrict automated plans to mutual funds, E*TRADE allows automatic recurring purchases of exchange-traded funds (ETFs) such as VOO, VTI, and QQQ, as well as no-load mutual funds.
No. E*TRADE offers $0 commission on online US stock and ETF trades, including recurring automated purchases. There are no plan maintenance or recurring schedule setup fees.
The minimum investment amount per recurring security on E*TRADE is $25, making it simple to build an automated multi-asset portfolio with modest recurring transfers.
Log into your account, hover over "Trading" or "Transfers", and select "Automatic Investing". From your active plans dashboard, you can adjust allocation amounts, change linked bank accounts, pause contributions, or cancel the schedule at any time.
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