Building Your Retirement Savings? 1 Easy Trick to Help You Grow Your Wealth Exponentially

Do you feel like your retirement accounts just aren't growing fast enough? If so, you're not alone. And the truth is, you may not be doing enough to help yourself. Most people arguably aren't, in fact, and as a result they are setting themselves up for an eventual struggle to maintain their standard of living after they retire.

It doesn't have to be this way, however. One simple strategy could change everything -- for the better -- in terms of how you save, invest, and grow your money.

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One thing changes everything

So what's the one easy trick that will help you grow your retirement nest egg exponentially? Automate as much of your saving and investing as you possibly can. That's it? Yep, that's it.

It's surprisingly much easier said than done, however. You won't be surprised to learn that people are busier and more distracted than they've ever been before. Technology gets most of the blame. Being constantly connected to the rest of the world through our electronic devices means we're also constantly subject to interruption by anyone who wants our attention and anything that grabs our attention.

The end result is lots of inefficient busyness. Bolstering this phenomenon is the avoidance of the guilt we'd otherwise feel for not offering some sort of responsive effort to friends, family, coworkers, and even bosses. Investors aren't immune to this dynamic either.

That's a problem simply because it makes it all too easy for people to fail to take care of the simplest of tasks -- like depositing money into a brokerage account or IRA, or doing something constructive with those funds once they have been deposited.

Supporting this idea is a recent study from retirement plan administrator Vanguard showing that investors who had left rollover IRA money uninvested -- in other words, holding it as cash in their accounts -- were twice as likely to have done so unintentionally than they were to have deliberately chosen to have kept those funds uninvested.

All too often, the things you're going to get around to doing when you "find the time" never actually get done. The key, therefore, is establishing automated actions that don't require any additional effort on your part beyond the initial setup. And there's more than one recurring task relating to your efforts to save for retirement that you'll want to put on autopilot.

What (and how) to automate

So what exactly should be automated? Getting money added to your retirement account regularly should be the first priority.

Corporate 401(k)s and related plans are an ideal model for how this should happen. These retirement plans are funded with money that is deducted from workers' paychecks before they're issued, and workers only have to request their payroll deductions once. After that, they will happen every time that job pays them without any additional action by the saver -- unless they choose to increase (or decrease) the percentage of their checks that is going toward their retirement account. In most cases, workers soon stop missing the money, or even noticing it's being removed.

You can do something similar on your own with a conventional brokerage account or even a traditional or Roth IRA. Every brokerage firm's processes and are a little bit different from those of their peers, but most of the major ones can handle automatic fund transfers from a bank account to a brokerage account or IRA on a recurring basis. You'll only need to provide them with permission once. And yes, you can turn these automated deposits off just as easily.

The second behavior you'll want to put on autopilot is using those regular cash inflows to purchase the assets you want, as most 401(k) plan participants almost certainly do. Most investment firms currently only allow accountholders to make automatic recurring purchases of mutual funds, although a handful can arrange for automated investments in individual stocks and exchange-traded funds.

Just be cautious if you're making purchases of individual stocks in this manner. This approach lends itself to investing in mutual funds, which are diversified baskets of stocks. You probably won't want to set up automated purchases for most individual stocks, however, if only because you might forget you're buying them and end up with a much larger fraction of your assets invested in one company than you actually want.

That being said, perhaps a hybrid version of this strategy could be right for you. While so-called robo-advisors aren't for everyone due to their above-average fees, there's no denying that these hands-off tools that automate portfolio rebalancing have their value. If you have trouble making the time to occasionally rebalance your portfolio, a robo-advisor can do it for you.

For many investors, the stronger performance they get out of their portfolios more than makes up for the higher upfront costs.

Make the time now, or pay the price later

If you're finding it hard to make time to manually make deposits into your retirement savings account -- and then decide how you want that cash to be invested -- you probably will also struggle to find time to put these automated processes into place. But this is one of those instances where busy people will need to make a point of making time at least once to make it happen. Then they can leave matters on autopilot.

It's worth the work in the long run -- and this might help motivate you. Investing just $300 per month into an S&P 500 index fund for 30 years at an average annualized rate of 10% (about what the index has returned on average in modern times) would leave you with somewhere in the ballpark of $680,000 at the end of that stretch.

The chief challenge in getting to that mark is just consistently depositing and investing that money even when you're distracted or discouraged by the market's temporary headwinds. If you take that risk altogether out of the equation, though, you should wind up much wealthier in the long run.

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James Brumley has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.