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What do booking flights and automating investments have in common?

Imagine you’re getting on a plane (pre-Covid, of course) heading to a vacation destination. As you settle into your seat, you feel happy knowing that a great holiday awaits you. At that point you get a questionnaire from the pilot. She wants your input on the following:

• How much fuel should the plane have?
• How many infant life vests should be on board?
• Which route should the aircraft take?
• At what speed should the plane go to reach on time?

Suddenly, your happiness evaporates. Even if you theoretically knew the answers to these questions, unless you’re a pilot, would you really want to make these decisions? And if you did, how comfortable would you be on the flight? Aside from Covid flying, this probably sounds like the most nightmarish way to fly.

When I travel, I want these decisions to have been made already. I don’t want to review each step. I want the smooth sailing feeling of an almost automated experience. From checking in to disembarking, I want my decision-making obligations to be limited to what I read or eat on the flight.

This hands-off ideal applies to my investment approach as well. Once I’ve made the initial decisions of how/when/where, the whole system needs to be more or less automatic. Having to make these preliminary choices was a big reason I didn’t get started much sooner. The hassle of getting the various pieces together to make it happen deterred me for years, but after successfully procrastinating all this time, finalising these decisions in the last few months has been a big step forward.

A few months into investing, my Zerodha balance had dried up and it was time to deposit more money. I just had to keep adding money to my Zerodha account to allow my investments to continue. But even this became an annoying bottleneck. I had to constantly remind myself to do it and never actually got around to it when I had the time. (Sorry, I’m reading my book, ask the co-pilot which route this flight should take.) The idea of expending mental energy on these decisions was enough to make me procrastinate again.

As with any goal, the will power and motivation that get you going in the beginning eventually fade. With that, so do my efforts to maintain a well-functioning system. But if my system is strong enough to progress in the absence of my initial enthusiasm, I can still meet my goals. Even if I’m tired or sleep deprived, if I have a ticket, I’m getting on that plane. (And if you know me well, I will also be at the airport WELL before I need to be #Poyannil.) The key factor here is the system.

For me, automating my investment system makes it work for me, rather than the other way around. I need the system to work independently of my motivation levels. My ability to plan for infant life vests should be irrelevant to taking a flight. The whole point of an SIP is to ride out the fluctuations in the market by removing my emotions from the equation. But how removed can I be if I have to spend time and energy at regular intervals deciding whether or not to continue? Instead, I should automate the whole process to ensure that I stay on track.

Zerodha, and most other investment platforms, offer the option of automatically withdrawing a fixed amount from my bank account and investing it in the fund of my choice. It takes some effort to set up, but it’s more than worth the time saved in the long run. I can still check on it as often as I want or stop/start/change it as necessary. But in the absence of any changes, it will continue to function without any prompting. This makes it an opt-out, rather than an opt-in, system. Instead of periodically wondering whether to continue, I only have to think about it if and when I want to put a stop to it. The latter is far less frequent and would be a fairly easy decision to make when the time came. Once investing becomes the default, with almost no ongoing effort on my part, I am still actively making good financial choices.

Knowing that I am likely to procrastinate and/or think for a while before changing my investment plan means that I won’t press pause in any hurry. The decision-making burden now falls on the other end. Making things easy for myself and tailoring my investment plan to my habits help ensure I will stick with it.

At the end of each month, with minimal effort and time, my automatic personal finance system takes me closer to my financial goals. I can just get on the plane, plug in my headphones, and look forward to my vacation in peace.