Iāve not seen any other platform have auto-stops or the like. Iād 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 āsafeā index.
What is important to the implementation, however, is fractional share purchasing. When I set up a regular transfer in to Freetrade of Ā£X, and ask Freetrade to invest Ā£X in to ETF Y, I need 100% of X to be invested in Y, so thereās 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 āset and forgetā, which is what this feature should be about.
I canāt think of a use case for recurring sells, and it might be damaging just to offer it.
Thereās 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 itās not a massive problem, I just let it build up till thereās enough to buy something
Interesting. I guess I automatically re-interpreted this idea in my head to be my own version, which is āregular investmentā, not ārecurring tradeā. I think with a āregular investmentā feature you really do need it to invest everything so you donāt have to baby sit it. A basic ārecurring tradeā 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 )
Is there a way (that I am currently unaware of) to make standing order to buy shares into a particular ETF or stock. For instance letās say I want to Ā£100 of an ETF (Assuming that the price of the ETF is below Ā£100) the first day of each month, is there a way to do this automatically without lifting a finger. Whether it be that the funds used to buy the ETF are taken from my bank account or through cash in the freetrade app.
In the case that this feature hasnāt been implemented yet, do you think this will be good idea and when you think this feature could be operational, itād certainly help those using a cost-averaging strategy. I assume that the way to do it currently is to create a standing order through my bank and then buy the shares in app manually.
I think these are called recurring trades which are different to limit orders (which are buying at certain price parameters rather than on a date parameter)
HL has a regular savings feature where you can set up a monthly direct debit and set it to buy shares every month. I actually used to use this because it was the cheapest way to buy shares on HL, commission was 1% with a minimum of Ā£1 and max of Ā£10 I think rather than the usual Ā£11 or whatever
I think something similar (but even cheaper ) would be a good addition