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  • FIRST POST
    • stuckinazoo
    • By stuckinazoo 13th Apr 18, 6:39 PM
    • 17Posts
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    stuckinazoo
    Regular investment
    • #1
    • 13th Apr 18, 6:39 PM
    Regular investment 13th Apr 18 at 6:39 PM
    I was about to set up an AJ Bell monthly investment of 25 in government bonds to balance out a riskier lump sum and others I might make in the future. But a charge of 1.50 every month is making me think twice. Should I just hang on to my money and invest quarterly for example? And are regular investments generally better suited to 1. other providers and/or 2. serious amounts of say 100/month upwards.
Page 1
    • ValiantSon
    • By ValiantSon 13th Apr 18, 6:50 PM
    • 2,537 Posts
    • 2,491 Thanks
    ValiantSon
    • #2
    • 13th Apr 18, 6:50 PM
    • #2
    • 13th Apr 18, 6:50 PM
    Other platforms are available which don't charge trading fees. Have a look on Monevator for a comparison.
    • rathernot
    • By rathernot 13th Apr 18, 6:54 PM
    • 270 Posts
    • 75 Thanks
    rathernot
    • #3
    • 13th Apr 18, 6:54 PM
    • #3
    • 13th Apr 18, 6:54 PM
    You'd be paying them 6% just in trading fees so what return would you expect to receive?
    • capital0ne
    • By capital0ne 13th Apr 18, 6:55 PM
    • 529 Posts
    • 256 Thanks
    capital0ne
    • #4
    • 13th Apr 18, 6:55 PM
    • #4
    • 13th Apr 18, 6:55 PM
    I was about to set up an AJ Bell monthly investment of 25 in government bonds to balance out a riskier lump sum and others I might make in the future. But a charge of 1.50 every month is making me think twice. Should I just hang on to my money and invest quarterly for example? And are regular investments generally better suited to 1. other providers and/or 2. serious amounts of say 100/month upwards.
    Originally posted by stuckinazoo
    At this level of 'investment' you may as well just save the money in a 3% bank account.
    • stuckinazoo
    • By stuckinazoo 13th Apr 18, 7:43 PM
    • 17 Posts
    • 0 Thanks
    stuckinazoo
    • #5
    • 13th Apr 18, 7:43 PM
    • #5
    • 13th Apr 18, 7:43 PM
    Maybe I should have mentioned this is my lifetime ISA so expect to be contributing for 17 years. We need to take into account my 25% bonus on this contribution and probably a lump sum towards the end of each year.
    • rathernot
    • By rathernot 13th Apr 18, 7:45 PM
    • 270 Posts
    • 75 Thanks
    rathernot
    • #6
    • 13th Apr 18, 7:45 PM
    • #6
    • 13th Apr 18, 7:45 PM
    Maybe I should have mentioned this is my lifetime ISA so expect to be contributing for 17 years. We need to take into account my 25% bonus on this contribution and probably a lump sum towards the end of each year.
    Originally posted by stuckinazoo
    Honestly, it's just a numbers game.

    If you're paying 6% of 25 to put 25 in your LISA you have to make 6% back just to clear your trading costs.

    Respectfully I wouldn't be paying 1.50 to add just 25.

    Put the 25 in a savings account and drop in the lump sum at the end of each year IMO.
    • grey gym sock
    • By grey gym sock 14th Apr 18, 2:24 AM
    • 4,444 Posts
    • 3,992 Thanks
    grey gym sock
    • #7
    • 14th Apr 18, 2:24 AM
    • #7
    • 14th Apr 18, 2:24 AM
    Put the 25 in a savings account and drop in the lump sum at the end of each year IMO.
    Originally posted by rathernot
    that's exactly the right answer ... according to an excessively pedantic formula, which i explained on a recent thread.

    the formula, for the optimal number of times to invest per year, was:

    SQRT(0.5 * i * r / c)

    where

    i is the total amount invested per year ... which is 12 * 25 = 300;

    c is the cost of each investment ... viz. 1.50;

    r is the cash drag rate, i.e. what rate of return you lose by not being invested sooner ... assuming gilts have an expected return of 2%, and you can get about 1% in a savings account, then the cash drag rate is the difference, 1%, or 0.01

    so that gives

    SQRT(0.5 * 300 * 0.01 / 1.50)

    which equals 1, meaning 1 investment per year.
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