AJ bell ETF purchase costs

mobro123

Hi all,

Just wondering if it's possible to set a regular investment amount of £10,000+ and then cancel after the first payment to avoid paying the £9.99 ETF purchase costs?

Thanks,
M

Alexland

We do this on smaller amounts to buy more ETF units from the cash balance in our AJ Bell LISAs however the function only trades once a month, around the 10th, and you have to remember to login from the next day onwards to cancel the trade although I am told if you leave it running without enough cash in the account it just fails without incuring any charges but haven't tested that myself.

Still on £10k any delay in placing the order the market is likely to have moved by much more than the £8.45 saving so you may wish to spend the £9.95 to get certainty on the price as it's a very low proportion of the investment value.

george4064

Yes it’s possible, if you forget to cancel it and therefore have insufficient cash for the next monthly trade you’ll get a secure message along the lines of; “we tried to place your regular investment but there was insufficient cash in account XYZ to place your instruction. Please ensure there is sufficient cash when regular investments are active.”

I’d just make sure you remember to cancel though. 

Thrugelmir

mobro123 said:

Just wondering if it's possible to set a regular investment amount of £10,000+ and then cancel after the first payment to avoid paying the £9.99 ETF purchase costs?

With markets gyrating wildly within a trading session I'd suggest it's worth focussing on the price you are paying rather than the transaction charge. 

GeoffTF

Deleted_User said:

Alexland said:

Still on £10k any delay in placing the order the market is likely to have moved by much more than the £8.45 saving so you may wish to spend the £9.95 to get certainty on the price as it's a very low proportion of the investment value.

If you're buying an equities ETF, then perhaps the expected return when holding it is about 6% per year, which equates to about 0.02% per day, which is £2 per day on a £10k holding. On that basis, the lost expected return by delaying a purchase until the next regular investment date would exceed the dealing commission saved (£8.45) if the delay is more than about 5 days.

Of course, equities don't move up by a steady 0.02% per day. They typically move 0.5% or more per day - but that can be up or down (with slightly over 50% of days being up). So 1 day delay on a £10k investment could easily make or lose you £50 or more. However, if you're happy to play the averages, then it's logical to delay no more than about 5 days on a £10k purchase.

The OP said that he is making regular investments. If he is investing £10K per month, it does not matter much whether he chooses to invest on the first day of the month or any other day of the month. He might as well minimise his costs.

GeoffTF

Here is an interesting link:

https://www.investopedia.com/day-trading/best-time-day-week-month-trade-stocks/

You may benefit from buying on 10th to the 15th of each month.

grumiofoundation

GeoffTF said:

Deleted_User said:

Alexland said:

Still on £10k any delay in placing the order the market is likely to have moved by much more than the £8.45 saving so you may wish to spend the £9.95 to get certainty on the price as it's a very low proportion of the investment value.

If you're buying an equities ETF, then perhaps the expected return when holding it is about 6% per year, which equates to about 0.02% per day, which is £2 per day on a £10k holding. On that basis, the lost expected return by delaying a purchase until the next regular investment date would exceed the dealing commission saved (£8.45) if the delay is more than about 5 days.

Of course, equities don't move up by a steady 0.02% per day. They typically move 0.5% or more per day - but that can be up or down (with slightly over 50% of days being up). So 1 day delay on a £10k investment could easily make or lose you £50 or more. However, if you're happy to play the averages, then it's logical to delay no more than about 5 days on a £10k purchase.

The OP said that he is making regular investments. If he is investing £10K per month, it does not matter much whether he chooses to invest on the first day of the month or any other day of the month. He might as well minimise his costs.

No they didn't. They asked if they could make one regular investment of 10k plus and then cancel it (to save £8.45)

GeoffTF

grumiofoundation said:

GeoffTF said:

Deleted_User said:

Alexland said:

Still on £10k any delay in placing the order the market is likely to have moved by much more than the £8.45 saving so you may wish to spend the £9.95 to get certainty on the price as it's a very low proportion of the investment value.

If you're buying an equities ETF, then perhaps the expected return when holding it is about 6% per year, which equates to about 0.02% per day, which is £2 per day on a £10k holding. On that basis, the lost expected return by delaying a purchase until the next regular investment date would exceed the dealing commission saved (£8.45) if the delay is more than about 5 days.

Of course, equities don't move up by a steady 0.02% per day. They typically move 0.5% or more per day - but that can be up or down (with slightly over 50% of days being up). So 1 day delay on a £10k investment could easily make or lose you £50 or more. However, if you're happy to play the averages, then it's logical to delay no more than about 5 days on a £10k purchase.

The OP said that he is making regular investments. If he is investing £10K per month, it does not matter much whether he chooses to invest on the first day of the month or any other day of the month. He might as well minimise his costs.

No they didn't. They asked if they could make one regular investment of 10k plus and then cancel it (to save £8.45)

Yes, you are right. When to make regular investments is an interesting question nonetheless.