Ways to Automate Cash Management for Long-Term Investing

Announcing new cash management services as part of new offerings for TD Ameritrade managed accounts.

https://tickertapecdn.tdameritrade.com/assets/images/pages/md/Automate it: cash management flexibility
5 min read
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Key Takeaways

  • Automation may help investors maintain discipline during market volatility 

  • Cash management features can allow investors to automate regular transfers between investments and cash

  • TD Ameritrade clients can consider using a new feature linked to a suite of automated and managed portfolio products

As you plan for long-term savings, identifying your goals and creating an investment strategy are key starting points toward finding a financial path that’s right for you.

Once you have your goals and strategy in place, you’ll also want to plan ways to manage your cash flows through changing market conditions.

When the stock market is thriving, it may feel easy to continue contributing to a portfolio. But when the market is more volatile, investors may be more reluctant to forge ahead with their long-term investment strategies. If they see the value of their investments drop, they may hesitate to continue with their plans. That’s why many traders develop a plan for remaining flexible during more turbulent times in the market.

To start developing a cash management plan for market volatility, you can ask some key questions about your situation:

  • How can you calmly manage cash transfers into your portfolio when its values are constantly changing?
  • How can you assess your cash and market positions without emotional thinking that can lead to trading decisions that stray from your long-term investment vision?
  • How would you quickly assess the impact of increasing, decreasing, or closing out your positions on your tax situation and long-term goals?

Managing cash can be stressful for investors, but automated technology offers one solution that can help minimize spur-of-the-moment decision-making.

Automating Your Cash Management Strategy

Whether you’re a self-directed investor or you hold a managed portfolio, moving assets in and out of cash via automation may add greater ease and efficiency to your investing.

New cash management features are now linked to Essential Portfolios, Selective Portfolios, and Personalized Portfolios—three digital and managed portfolio products offered by TD Ameritrade Investment Management, LLC. These features provide a range of automated functionality (see figure 1).

Suppose you’d like to regularly add funds from your bank account to your investments, or perhaps change the amount of money automatically going into your portfolio. You may wish to set these transfers to a weekly, monthly, or quarterly schedule using an automated cash management tool. If you decide to make changes, you can easily revise the automated amounts or frequency.

Automation may make it easier for you to add or withdraw account funds, but understanding your tax situation and long-term financial goals can be less simple. Some automated tools, such as the TD Ameritrade cash management tool, help by displaying at a glance how your trading and investing decisions affect your taxes or financial goals. These tools can sum up your situation in a graph on your trading screen, giving you something of a 360-degree view of your investment scenario before you take action.

Plus, if any element of your investing strategy were to change—your objectives, risk tolerance, or financial situation, for example—you can always edit or cancel your automated cash management strategy at any time. 

Automating a Steady Ride Through a Volatile Market

A recent survey conducted for TD Ameritrade showed that millennials may have a different approach to managing risk as compared with Generation X and baby boomers. Millennials are more likely to turn to automated investing solutions, whereas their older cohorts are more likely to seek advice from a professional advisor, according to the study.

Over one-third of the millennial group said that a solution to automate regular investments would help them feel less nervous during periods of market volatility. Such a solution might help take the emotions out of investing, according to Keith Denerstein, director of investment products and guidance at TD Ameritrade.

Automation in investing or managing cash may be worth considering, if only to see how it might add more efficiency to your investing practices. By testing an automation tool, you’ll gain more information to help make investment decisions. You may also find support for sticking to your long-term investment goals during periods of increased market volatility.

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Key Takeaways

  • Automation may help investors maintain discipline during market volatility 

  • Cash management features can allow investors to automate regular transfers between investments and cash

  • TD Ameritrade clients can consider using a new feature linked to a suite of automated and managed portfolio products
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