Author Topic: Setting reinvestment levels  (Read 1466 times)

shelivesthedream

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Setting reinvestment levels
« on: June 07, 2014, 01:05:44 PM »
My investment platform has just written to me to say that they are changing their policy regarding reinvestment of dividends. Previously, funds were reinvested when the income reached 50 per holding and shares at 200 per holding. None of my investments reach this level of income annually.

Now, however, I can set my own reinvestment level, from 10 upwards, but each transaction will be subject to a 1% fee. I am not sure what level to set myself so that I minimise being penalised by the fee but maximise opportunity to compound (income is held as restricted cash in the account unt it is reinvested and so earns nothing). I am in my mid-twenties so am working on a timescale of several decades. It seems to me that I should set it as low as possible, but that's just a gut feeling - I'm not really sure what maths to do to work it out properly.

Edit: there is a 1 minimum and 10 maximum to the 1% transaction fee.

PeteD01

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Re: Setting reinvestment levels
« Reply #1 on: June 07, 2014, 07:16:25 PM »
Set the limit to 100

butchmonkey

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Re: Setting reinvestment levels
« Reply #2 on: June 07, 2014, 08:30:12 PM »
+1 unless you want to set very high ( > 1000) so you are paying <1% per reinvestment.

It all depends on your expected returns and the amount of dividends your account yields.

That's a pretty draconian fee though.


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