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  • FIRST POST
    • jurinho88
    • By jurinho88 12th Aug 17, 5:26 PM
    • 2Posts
    • 0Thanks
    jurinho88
    Moneyfarm investments
    • #1
    • 12th Aug 17, 5:26 PM
    Moneyfarm investments 12th Aug 17 at 5:26 PM
    Hi everybody,

    Just recently started investing through moneyfarm.com and there is something i've noticed:

    The interest on the investment within the month's period of my initial deposit varied from -0.07% to 0.64%.
    The investment is instant access and can be cashed at any point, while the cashed investment can obviously be reinvested again...
    This made be come up with an idea- why not cash the investment at let's say after reaching about 0.5% interest and than after a few days invest again and just repeat the whole process over and over?
    Would that not be more effective than keeping it for few years and experiencing price drops and rises without securing any cash from it?
    If the investment reaching interest of about 12pa% is considered to be great, the whole process would only needed to be repeated twice a month to achieve that if we were to take 0.5% as the trigerr for withdrawal.
    I suspect that there will be an element that will prevent that strategy from being viable, I would just like to ask more experienced investors to express an opinion as to why (as I suspect) that would not work?
    Would it be against terms and conditions to make multiple withdrawals and deposits within such a short period of time or is there something else I'm missing?
Page 1
    • dunstonh
    • By dunstonh 12th Aug 17, 5:54 PM
    • 89,907 Posts
    • 56,585 Thanks
    dunstonh
    • #2
    • 12th Aug 17, 5:54 PM
    • #2
    • 12th Aug 17, 5:54 PM
    The interest on the investment within the month's period of my initial deposit varied from -0.07% to 0.64%.
    Interest is only paid on the fixed interest securities within the investment. Do you really mean interest here?

    This made be come up with an idea- why not cash the investment at let's say after reaching about 0.5% interest and than after a few days invest again and just repeat the whole process over and over?
    That is not how investments work. You will have positive days, negative days and nothing days. You never know what the next day will be.

    f the investment reaching interest of about 12pa% is considered to be great
    You are not going to get 12% interest at this part of the economic cycle. However, its clear you are not referring to interest now.

    is there something else I'm missing?
    To get returns on the investments on the markets you have to be in the markets. If you keep popping in or out you will get lower returns over the long run as positive days outnumber negative days
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • jurinho88
    • By jurinho88 12th Aug 17, 8:12 PM
    • 2 Posts
    • 0 Thanks
    jurinho88
    • #3
    • 12th Aug 17, 8:12 PM
    • #3
    • 12th Aug 17, 8:12 PM
    Thank you for the response,

    As you have stated- it is not the interest but the return that I was referring to.
    If it is true that positive days on the market outnumber the negative ones ( which I am entirely inclined to agree with) why does my investment show 0.6% return one day then 0.4% the next day just to go up to 0.8 the next and then drop to 0.5% and so far and so on.
    What I meant is why not just withdraw the money when the return reaches a high position on that 'swing' and put it back in after a day or two and than do the same again?
    Would I not avoid my return droping?
    As an example:

    I invested £1000, which after 5 days and a return of 0.5% gave £1005
    I withdraw £1005 and than invest the whole amount
    I wait for the investment to reach an expected return and do the same
    I reinvest again (obviously a higher amount of £ again as I now can also invest the return)

    Now more real life example:

    After a few days after i put the money into my moneyfarm the return was showing 0.84%
    At the moment (after about 4 weeks) the same investment shows 0.25% return.
    Now if I withdrew the money after reaching 0.84% within few days I would have 100.84% of capital to reinvest.
    However I did not and now (after about a month of the initial investment)I have a return of 0.25% on my initial capital instead of 100.84% percent of the initial capital ready to invest again.

    Would that not be more profitable than sticking to initial £1000 investment which would not be touched for an extended period of time and be exposed to the 'swings'?
    Would I not this way be given an option to gradually increase the amount invested by reinvesting the withdrawn return together with the initial capital?
    Last edited by jurinho88; 12-08-2017 at 8:21 PM.
    • dunstonh
    • By dunstonh 12th Aug 17, 8:46 PM
    • 89,907 Posts
    • 56,585 Thanks
    dunstonh
    • #4
    • 12th Aug 17, 8:46 PM
    • #4
    • 12th Aug 17, 8:46 PM
    why does my investment show 0.6% return one day then 0.4% the next day just to go up to 0.8 the next and then drop to 0.5% and so far and so on.
    Returns will be what they will be. You cannot predict. You could get 8 growth days in a row or 8 negative. You just do not know.

    What I meant is why not just withdraw the money when the return reaches a high position on that 'swing' and put it back in after a day or two and than do the same again?
    What happens if you hit a sustained growth period of say 15%. You would have pulled out early on and miss the rest. When would you go back in?

    Would that not be more profitable than sticking to initial £1000 investment which would not be touched for an extended period of time and be exposed to the 'swings'?
    No. Trying to second guess markets which are unpredictable will normally result in lower returns than remaining in the market.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • bigadaj
    • By bigadaj 12th Aug 17, 8:52 PM
    • 10,803 Posts
    • 7,100 Thanks
    bigadaj
    • #5
    • 12th Aug 17, 8:52 PM
    • #5
    • 12th Aug 17, 8:52 PM
    Thank you for the response,

    As you have stated- it is not the interest but the return that I was referring to.
    If it is true that positive days on the market outnumber the negative ones ( which I am entirely inclined to agree with) why does my investment show 0.6% return one day then 0.4% the next day just to go up to 0.8 the next and then drop to 0.5% and so far and so on.
    What I meant is why not just withdraw the money when the return reaches a high position on that 'swing' and put it back in after a day or two and than do the same again?
    Would I not avoid my return droping?
    As an example:

    I invested £1000, which after 5 days and a return of 0.5% gave £1005
    I withdraw £1005 and than invest the whole amount
    I wait for the investment to reach an expected return and do the same
    I reinvest again (obviously a higher amount of £ again as I now can also invest the return)

    Now more real life example:

    After a few days after i put the money into my moneyfarm the return was showing 0.84%
    At the moment (after about 4 weeks) the same investment shows 0.25% return.
    Now if I withdrew the money after reaching 0.84% within few days I would have 100.84% of capital to reinvest.
    However I did not and now (after about a month of the initial investment)I have a return of 0.25% on my initial capital instead of 100.84% percent of the initial capital ready to invest again.

    Would that not be more profitable than sticking to initial £1000 investment which would not be touched for an extended period of time and be exposed to the 'swings'?
    Would I not this way be given an option to gradually increase the amount invested by reinvesting the withdrawn return together with the initial capital?
    Originally posted by jurinho88
    Why don't you give it a go and report back, have to do it over a few months though to get a representative sample.
    • ricky_v
    • By ricky_v 12th Aug 17, 9:03 PM
    • 264 Posts
    • 131 Thanks
    ricky_v
    • #6
    • 12th Aug 17, 9:03 PM
    • #6
    • 12th Aug 17, 9:03 PM

    I invested £1000, which after 5 days and a return of 0.5% gave £1005
    I withdraw £1005 and than invest the whole amount
    I wait for the investment to reach an expected return and do the same
    I reinvest again (obviously a higher amount of £ again as I now can also invest the return)
    Imagine you own a slice of a pie.
    After 5 days the pie grows bigger and so does your slice.
    You take your slice and then put it back into the pie.
    Your slice fits neatly into the pie, your slice doesn't grow bigger, you've gained nothing.
    • norsefox
    • By norsefox 12th Aug 17, 9:32 PM
    • 73 Posts
    • 51 Thanks
    norsefox
    • #7
    • 12th Aug 17, 9:32 PM
    • #7
    • 12th Aug 17, 9:32 PM
    The fundamental problem with this theory is that you don't know when the upswings will be. All you know is that markets are volatile so will go up and down.

    You have every opportunity to jump out early off an upswing or jump back in on a downswing.

    Why waste your time? If it was that easy everyone would do it.
    • ChesterDog
    • By ChesterDog 12th Aug 17, 9:37 PM
    • 808 Posts
    • 1,475 Thanks
    ChesterDog
    • #8
    • 12th Aug 17, 9:37 PM
    • #8
    • 12th Aug 17, 9:37 PM
    Honestly, I think the best thing is to try it.

    There's nothing like demonstrating the drawbacks for yourself to really understand them.
    I am one of the "Dogs of the Index".
    • fiisch
    • By fiisch 12th Aug 17, 10:30 PM
    • 208 Posts
    • 89 Thanks
    fiisch
    • #9
    • 12th Aug 17, 10:30 PM
    • #9
    • 12th Aug 17, 10:30 PM
    Used since April and seen even bigger swings (0-4%).

    However your theory is flawed - check Ts & Cs. Something along the lines of withdrawals are free but they reserve the right to charge if the volume is excessive.

    I did wonder if, say for example Monday is a bumper day with 4% returns, if I request a withdrawal does it immediately lock in at that return or is there a lag time?

    I suspect if you starting di-vesting/investing on a regular basis, their customer service team would put a stop to it sharpish...
    • charoniv
    • By charoniv 13th Aug 17, 6:51 PM
    • 86 Posts
    • 25 Thanks
    charoniv
    You are talking about dealing on volatility.
    The idea is that when the market goes up investors take profit and it goes down. When the market goes down investors see it as a buying opportunity and it goes up. So we get short term increases and decreases with an underlying steady increase. So invest until it goes up, sell, wait for it to come down and start again.
    And it works and can make you money in small increments.

    Problem is that at some point something will happen - the market will keep increasing (maybe a bubble) and you will miss that. More likely there will be a crash/correction. These tend t happen very quickly and probably in your mid cycle - too quickly for you to react and will probably wipe out more than the profit you have made.

    Add that to the tendency to try and make up for missed profits and buy your way out of losses and you will probably end up losing more than you gain - but you will have short term fun if you're lucky.
    • coyrls
    • By coyrls 13th Aug 17, 8:12 PM
    • 922 Posts
    • 967 Thanks
    coyrls
    Sometimes it’s painful watching the cogwheels slowly grinding away. If it really was as easy as selling when your investment goes up and then buying it again when it goes back down, don’t you think others would have thought of this cunning plan by now?
    • Eco Miser
    • By Eco Miser 14th Aug 17, 3:19 PM
    • 3,226 Posts
    • 2,989 Thanks
    Eco Miser
    Sometimes itís painful watching the cogwheels slowly grinding away. If it really was as easy as selling when your investment goes up and then buying it again when it goes back down, donít you think others would have thought of this cunning plan by now?
    Originally posted by coyrls
    They have, often.
    It's why, as classes, brokers are rich and clients poor.
    Eco Miser
    Saving money for well over half a century
    • bigadaj
    • By bigadaj 14th Aug 17, 7:45 PM
    • 10,803 Posts
    • 7,100 Thanks
    bigadaj
    They have, often.
    It's why, as classes, brokers are rich and clients poor.
    Originally posted by Eco Miser
    Maybe the OP will report back in a few months with details of his new yacht.
    • Brand
    • By Brand 21st Aug 17, 8:05 AM
    • 77 Posts
    • 21 Thanks
    Brand
    I agree with the critics.
    Robo-funds are intended for minimal intervention by the investor. Fast switching, if any, intended to be done by the fund manager.
    There is an admin and financial cost to the fund of any trade, so in effect it is asking the other investors to bear the trading costs.

    If Frequent swing trading is better done using an ETF in a stockbroking account, or, even more usual, a major stock index in a spreadbetting account. Lots of people try this. Best of luck!

    You don't need to try it out in practice.
    It is good education just to ask yourself:
    What would the stockmarket have to be like in order for such an in-out trading system to work?
    In order for such a swing trade system to work, it has assumed a normal-like growth of, say, 12% pa and to have more up periods than down periods.
    Ask yourself:
    If that is the case, is there an even better way to enhance growth in such a scenario?
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