drip feeding

Jaguar_Skills

As any of you who saw my post a couple of days ago will know I am currently away travelling and I've had more time than usual to read some of the posts in here.

One that interested me was drip feeding into an index tracker fund. I understand the principle of how the money is put into the account (just a standard DD of whatever per month) but how do you decide where it goes. Is there an option to split % s ie 30% going in FTSE 100 30% somewhere else, 40% in another???

TCA

Jaguar_Skills wrote: »

Is there an option to split % s ie 30% going in FTSE 100 30% somewhere else, 40% in another???

You can buy whatever you want, usually subject to a minimum amount per fund/share, depending on the platform you use.

Jaguar_Skills

Do you have to actively make a decision then each month or can you just set it up to keep investing in say 3 or 4 trackers?

How do you do it?

I'm sorry for all my newbie questions. I'm just curious, clueless and keen!

TCA

You can set it up in advance to buy the same investments every month if that's what you want.

Ryan_Futuristics

Cost-price averaging's one of the great hidden features of the markets

If you're putting £100/month in, you'll automatically buy more shares when the markets are down, and fewer when they're up

That unintuitive machine-logic that makes you wealthy

Jaguar_Skills

CoSt price averaging... Could you explain a little more? Does it just mean that when low you get more for your money? Ie more shares...

How do you guys regularly invest. Make a payment then decide where to invest it or get the platform to invest automatically? If you can do that...

Jaguar_Skills

If it makes any difference I use HL

puk999

Jaguar_Skills wrote: »

CoSt price averaging... Could you explain a little more? Does it just mean that when low you get more for your money? Ie more shares....

Yes: http://en.wikipedia.org/wiki/Dollar_cost_averaging

Jaguar_Skills

So say I already have x amount of shares cost me x at the time I bought them. HL shows you a % increase and decrease with the accompanying amount you are in profit or loss.

If I reinvested more money into the same company or fund how do I track the profit again??

Ryan_Futuristics

Jaguar_Skills wrote: »

CoSt price averaging... Could you explain a little more? Does it just mean that when low you get more for your money? Ie more shares...

How do you guys regularly invest. Make a payment then decide where to invest it or get the platform to invest automatically? If you can do that...

It basically does ... Say you spend £10/week on eggs ... When eggs are trading at £1/each you buy 10 eggs ... Next week they're trading at 50p/each, and you can buy 20

If you were hoarding eggs at home (rather than eating them) at this point you'd have spent a total of £20, and you'd have purchased a total of 30 eggs ... So the average price you've paid per egg is 75p

You can wait till eggs are trading at £1 again (call it the market peak) and sell them back to the vendor - 30x eggs at £1 each - and walk away with £10 profit ... And that's despite the fact you bought when the egg market was peaking


I invest monthly by having a decided-upon asset allocation first ... 40% UK equity income, 20% global investment trust, etc

Then I decide how much money I want to be invested in the market (at the moment my limit is to have 30% of my overall wealth in the markets) - so when I reach that point, I stop investing ... How soon do I want to reach that point? Maybe in a year or two, or maybe you just want to invest 10% of your regular income

Then I split the monthly amount between the funds I'm building up (it's a bit more complicated for me because I use valuation and take a slightly more active approach)

But Warren Buffett's advice: don't invest in what you don't understand, has helped me avoid big mistakes before ... So I'd recommend start very small, and read a lot, and don't make committed moves until you know exactly what you're doing, and exactly how you want to do it ... You'll learn how Hargreaves' monthly allocation works best by setting it up and just putting £25-50 or so into a fund or two

brendon

Ryan_Futuristics wrote: »

You'll learn how Hargreaves' monthly allocation works best by setting it up and just putting £25-50 or so into a fund or two

Doesn't that work out rather expensive. Don't use HL, but it looks they would charge £1.50 per purchase. If you are splitting £100 per month between 4 funds, that's 6% of your money gone. I'd rather invest in a different fund each month (pick at random) and pay 1.5%. (In fact, I wouldn't normally buy less than £1,000 of anything -- it works out too expensive on fixed fee platforms.)