Author Topic: Setting reinvestment levels  (Read 1820 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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