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.