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1 Easy Investing Hack to Put Away Thousands in Your Savings Account Per Year

It’s simple to tell people to start investing, but what if you don’t have any cash set aside? And what if you simply aren’t making all that much to begin with? In the past, I’ve recommended putting aside a set amount each month to put into investments. But I’ll be honest; that’s not doable every month, what with bill changes, an increase in necessities, gas prices, and more constantly changing. So, that’s why I have one easy investing hack so that literally any one can start investing.

Easy hack = thousands in your savings account I’ll get straight to the point. All you have to do for this easy investing hack to work is to take the last number in your savings account, and transfer it into your Tax-Free Savings Account (TFSA) or other investing portfolio each day. That’s it. This method can help you save over $1,500 every year.

Let’s look at an example. Let’s say you have $4,321 in your savings account today. Here’s how it could shake out in one week taking into account some costs.

Day Savings Transfer Total
Monday $4,321 $1 $1
Tuesday $4,265 $5 $6
Wednesday $4,168 $8 $14
Thursday $4,093 $3 $17
Friday $4,002 $2 $19
Saturday $3,987 $7 $26
Sunday $3,864 $4 $30

As you can see, at the end of one week you now have $30. Multiply that by 56 weeks in a year, and you’ll have about $1,680 at the end of the year to invest! That’s a fantastic place to start.

And let’s say you have a bit more and want to invest. You can always increase to two digits; in the example above, that would give you a total of $400 and a year-end total of $22,400! That’s a heck of a lot to invest from one very easy investing hack.

Now, here’s the next part of the hack that turns that original $1,680 into thousands!

Enter: Dividends If you’re a new investor looking to increase your bottom line quickly to create an investment portfolio, you want dividends. Dividends are paid out each quarter and sometimes monthly into your investment portfolio as cold, hard cash. This happens pretty much no matter what is happening with the stock.

A great place to start is with companies you know will be around decades from now. If you’re a new investor, you’re probably on the younger side. That means you want to invest and pretty much forget about it, contributing on occasion to increase your stake. So, a great choice would be with a Big Six bank.

The Big Six banks have been around for around 100 years or more, missing no payments in that time. If you want to get as much cash as possible, I would recommend Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM). The bank offers the highest yield at 4.71%, which equals $5.84 per share per year.

The bank trades at all-time highs, and while you could wait for a dip, you won’t go wrong with a Big Six bank. Canadian banks were some of the best performers during the Great Recession and this latest economic downturn, bouncing back to pre-pandemic prices within a year. So these are great, stable stocks to hold onto for decades.

Foolish takeaway Let’s say you have that $1,680 to invest. That would give you about 13 shares as of writing, which would equal $78 per year in dividends! On top of that, the stock has risen at a compound annual growth rate of 9.22% during the last decade. That means your original $1,680 could turn into $1,831.20 by year’s end. Combine that with dividends, and that’s $1,909!

Now, even if you didn’t add another penny but saw that same growth from CIBC, and you reinvested dividends, you could turn your original $1,680 into $5,794.08 in just a decade! All from one easy investing hack that really only took less than two minutes per day to achieve.

The post 1 Easy Investing Hack to Put Away Thousands in Your Savings Account Per Year appeared first on The Motley Fool Canada.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned.

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