I love this idea, this kind of feature would have to be one of the top ones I would cast my personal vote for.
To flesh this concept out a bit more, what kind of safety guards (if any) do you think you would need to have on a recurring trade? Is it ok to put responsibility on the user and say “it is up to you to keep an eye on price changes and cancel the recurring trade if it no longer represents good value for you”, or would you need a recurring trade to auto-stop if particular price levels are reached?
Also, do people have a use case for recurring sells or is this just for buys?
I personally can’t see a reason for recurring sells . For me it would be a seldom (if at all) used feature. I am aiming to go long with most of my investments, hence like the idea of buy at regular intervals to hedge against volatility. IMO It’s a far better approach compared to buying one-off large blocks of shares.
Since I can setup scheduled payments inside of Monzo, having a ‘Scheduled Buys’ feature in Freetrade would truly let me ‘set and forget’ . Automation FTW .
As that rather nuanced article notes, it’s still psychologically good to go monthly though, and of course it is the only practical option when you don’t have a lump sum and are just investing a proportion of your monthly salary. In this situation you wouldn’t want to build up cash to try and time the market: monthly payments are probably going to perform better (invest as soon as possible to benefit from gains in the market).
I’ve not seen any other platform have auto-stops or the like. I’d suggest Freetrade just keep it simple. People are only going to regularly invest in something they believe they would buy every month regardless of price: an ETF tracking a “safe” index.
What is important to the implementation, however, is fractional share purchasing. When I set up a regular transfer in to Freetrade of £X, and ask Freetrade to invest £X in to ETF Y, I need 100% of X to be invested in Y, so there’s nothing left over un-invested by next month. If there is, things start to get very awkward and decidedly non-automated and very much not “set and forget”, which is what this feature should be about.
I can’t think of a use case for recurring sells, and it might be damaging just to offer it.
There’s a need in the market, but whether FT want to address it is another question: people in the decumulation phase of their investing career (eg retirees) often pay investment managers hefty percentage fees to handle recurring sells for them.
On other platforms that offer recurring trades any left overs just end up as cash in your account, it would work better with fractionals but it’s not a massive problem, I just let it build up till there’s enough to buy something
Interesting. I guess I automatically re-interpreted this idea in my head to be my own version, which is “regular investment”, not “recurring trade”. I think with a “regular investment” feature you really do need it to invest everything so you don’t have to baby sit it. A basic “recurring trade” feature could work the way you point out, with manual intervention.
That is a pretty good article, thanks. Worth noting that the benefit of lump-sum over drip-feed is reduced if:
you use a platform with zero trading fees (hmm sounds familiar)
you end up being one of the minority of unlucky people who did invest that lump sum at the wrong time. Me, I like the comfort of averaging in, just in case. Minimise regret rather than optimise return.
I thought this plot can show the potential of DCA (or regular investing) into stocks versus setting aside the amount under the mattress (and that will work only if you can resist the urge to spend that stash on the shiny bling )