Delay in buying funds

snowqueen555

I'm guessing maybe even longer than that, as no plan to buy a house. Each time I buy am I not getting hit with that buy sell spread, am I not understanding something but each time I drip feed won't I be losing 5% vaue each time?

Aretnap

snowqueen555 wrote: »

I'm guessing maybe even longer than that, as no plan to buy a house. Each time I buy am I not getting hit with that buy sell spread, am I not understanding something but each time I drip feed won't I be losing 5% vaue each time?

Yes. However that's not a reason in itself not to drop feed. 5% is 5%, so whether you put in a lump sum of £10000 now, or 10 lots of £1000 over time, you still end up losing £500 to the bid/offer spread.

The thing to consider is timescale. If you're buying units with a view to holding them for 30 years or more, 5% is insignificant. If you're only going to hold them for a few years, 5% is a lot and you'd be better with a fund with a lower bid/offer spread and a higher annual fee. If you continue drip feeding for many years, at some point a time will come (eg as you get closer to retirement) when your investment horizon is closer to "a few years" than "thirty years". At that point you'd be better off finding another property fund to drip feed your money into - but keeping your existing L&G units.

snowqueen555

Aretnap wrote: »

Yes. However that's not a reason in itself not to drop feed. 5% is 5%, so whether you put in a lump sum of £10000 now, or 10 lots of £1000 over time, you still end up losing £500 to the bid/offer spread.

The thing to consider is timescale. If you're buying units with a view to holding them for 30 years or more, 5% is insignificant. If you're only going to hold them for a few years, 5% is a lot and you'd be better with a fund with a lower bid/offer spread and a higher annual fee. If you continue drip feeding for many years, at some point a time will come (eg as you get closer to retirement) when your investment horizon is closer to "a few years" than "thirty years". At that point you'd be better off finding another property fund to drip feed your money into - but keeping your existing L&G units.

Thanks I understand now!

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I also have another question, when buying stock with HL the trade price (£11.95) is also charged at the same time, this would explain why my portfolio says I am down (despite the shares being worth a little more today), and also for foreign shares they skim 1.5% in currency exchange?