Trading 212: AutoInvest, By Targets, or Self-Balancing Payment?

Trading 212 : AutoInvest, By Targets, or Self-Balancing Payment? on

When you go to copy a pie, any pie, not just the almost daily dividend pie, even pies that you make yourself, it’ll ask you how you want to invest in it, implying a payment method. There are two options. 

The first is auto-invest. This is the hands-off approach where money will be automatically deposited into your account from your bank at set intervals.

This means you don’t need to worry about the market; you just add to your diversified portfolio on a regular basis. 

The other option is to invest manually. This option is suitable for individuals who are unsure about allocating a fixed amount of their budget each month to investing.

It also appeals to those who prefer greater flexibility in determining when to make deposits.


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There’s really not a big difference between these two options, other than auto-invest will take care of it all on your behalf, whereas manual will give you a bit more flexibility in how you want to add in the future. 

You can also change your mind later if you don’t want to keep making deposits on auto-invest or if you’re in a more stable financial condition and want it taken care of for you.

Another feature of auto-invest is the investment plan, which comes in step two after you’ve selected auto-invest. Setting up your investment plan will be your next step if you decide to remain with the auto-invest option. 

To create your ideal investment period, deposit size, and deposit schedule, you can just use the sliders on this screen. If you’ve already had a lump sum to start with, just increase the figure for the initial deposit. 

You’ll see a prediction of your pie’s potential growth at the top of the screen based on the investment plan you’ve set up and the pie’s historical average yearly return rate. The estimation is obviously not a guarantee because it’s based on past returns.

Talking of the estimated return, this is how Trading 212 calculates that, and you can see that you may need to take it with a pinch of salt, according to related articles. 

So, the average annual return, a pie’s AAR (the average annual return), is the weighted average of the five-year annualized return of each of its slices. For slices aged between 6 months to five years, they calculate an annualized return over the entire available period. 

They substitute slices younger than six months, for example, recent IPOs, with the total stock market’s average return. Instead, they assume dividend reinvestment, and they do not account for taxation.

Using the annualized return of the previous five years is flawed, as past experience does not indicate future returns, but equally, it’s impossible to accurately predict the real returns you’ll actually get in the future.

Another question that is coming up more and more is, once you’ve started the pie, and deposited the minimum recommended amount of £400 into the pie for the almost steady dividends pilot, what do you do when you want to add to a pie? 

So, you’re faced with three options here, each leading to a different strategy toward achieving a diversified portfolio. 

By Target

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Imagine you have a pie, and each slice of the pie represents a different stock you’ve invested in. Now, when you invest more money into this pie, you can choose to do it in a specific way, targeting certain proportions.

So, if you decide to invest using targets, it means that when you add more money to your investments, you’ll do it in a way that keeps the same proportions as your original investment.

For example, if you initially invested $100 in five different stocks ($20 in each), and later decide to invest an additional $100, using targets means you’ll add $20 to each stock again, maintaining the same percentage of your investment in each stock.

In the case of the “almost daily dividend portfolio,” where you’re getting dividends nearly every day, this means you’ll keep adding money to each stock in the portfolio in the same proportions, like adding 2% of your total investment to each stock regularly, no matter if the stock prices have gone up or down since your last investment.


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Self-balancing, and this means that as you add more to the pie portfolio, it’ll add more money to the ones that have gone down and add less to the ones that have done well.

This aims to move the allocation back to the original weightings over time. The third option is custom, and this just means you can add to whatever you like, however much you like.

As always, I don’t really like general shoulds because people’s finances are all in different states and situations, but here are my thoughts on those three options, which could work towards reaching your investment goal.

Firstly, custom – I’d pretty much ignore this option, as it may not help in achieving a well-diversified portfolio. 

If you’re thinking of doing it this way, you’re probably overcomplicating something, which could impede reaching your investment goal. The pie feature should be made as simple as possible. 

Automated investing – if you’re tempted to be custom allocation each time, then why not just hold the stocks that you like individually and just buy more of them when you think they look undervalued to work towards a diversified portfolio?

I don’t really see a scenario where it makes sense to be custom investing each month, but if you do, let me know in the comments.

So, if I were copying a pie, I would start off with doing self-balancing early on while your portfolio is still being built up, and the deposits you add will have a big impact on the overall allocation. 

For example, if you start with £400 and you add £100 a month, now, the first additional deposit you’re adding is a 25% increase in your portfolio size in just the first month. This means that the deposits you add will have a significant enough impact on the balancing of the diversified portfolio. 

You most likely won’t need to do pie rebalances outside of when you add to the pie.

But anyway, at first, I’ll just go with the self-balancing option as I add to the pie, as it just keeps it simple and requires less manual effort from the investor.

Once your portfolio reaches a certain level where the additions you’re making are not significantly changing the pie total, then you can switch to adding by targets and then manually rebalancing as per the timeframe. 

If we go back to the example earlier, where adding the £100 was an additional 25% of the portfolio total, obviously, this becomes less and less of a percentage over time.

After three years, following the same amounts, you might have reached a portfolio of £4,000, a step closer to your investment goal. 

So that’s £400 starting and then £100 a month multiplied by 36 months. If you still want to contribute your regular £100 deposit; this will now only constitute 2.5% of the overall diversified portfolio.

This borderline, whether it will be enough to truly rebalance the pie, depends on how volatile your chosen investments are.

So, in short, self-balancing is fine. If you do it by target allocation, you’ll need to rebalance manually yourself, an order that requires precision. After a certain portfolio size, self-balancing won’t be enough to balance anyway, indicating a need for a more diversified portfolio.