Inertia in making investment decisions is a common problem faced by many people. While some people postpone saving and investment decisions for good reasons, such as low income and other commitments, others like Rohan do not save and invest because they keep postponing the decisions related to financial planning. For such people, the best way to ensure that some portion of their income gets invested is to make savings automatic, that is, in a way that does not require them to make frequent decisions on where and how much to invest. There are various ways in which Rohan can put his saving and investment exercise on auto mode till he is willing to give it the time and attention it requires.

He can use a salary deduction option with his employer, who may agree to deduct a fixed amount from his pay and use it to make an additional provident fund contribution or an insurance premium. He can also give a standing instruction to his bank to move money from his salary account into any investment avenue, including mutual funds (through SIP) and fixed deposits, on a given date, consistently.

He should preferably choose a date within a week of receiving his salary, so that he secures his savings before he spends most of his monthly income. All of these options require Rohan to create a one-time mandate for investing a fixed amount. After that it goes in to auto-mode and creates an investment portfolio for him with minimal action or decision from him. As Rohan realises the need to start investing, he will be ready to make the one-time effort. The low involvement required from his side to keep the investment going will suit his current reluctance to participate more actively. Also, these options will force Rohan to cut back on his reckless spending habit.

Content on this page is courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.