Trading212 Pie: Auto-invest vs Manual Investing?

When you go to copy a pie, any pie not just the (almost) daily dividend pie, even pies you make yourself it will ask you how you want to invest in it Auto-invest or Manual Investing. Learning the difference between these two options will help you set up your pie optimally to your preference.

 

 

Let’s look at the two options – AutoInvest & Manually.

 

Auto-Invest or Manual: Two options for investing in your Trading212 Pie

 

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 that you don’t need to worry about the market, you just add to your portfolio on a regular basis.

The other option is to invest Manually – this option is for those investors who aren’t sure if they can allocate a certain amount of their budget each month to investing or want to be more flexible about when to deposit.

 

What’s the difference between Auto-Invest and Manual?

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There really is not a big difference between these two options other than Auto-Invest will take care of it all on your behalf, whereas manual gives you a bit more flexibility in how you want to add to your portfolio 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 are in a more stable financial condition and want it taken care of for you now.

Investing Plan Value Projection Trading212

Another feature of Auto-invest is the investment plan which comes in Step 2 after you have selected Auto-invest.

Setting up your investment plan will be your next step if you decide to remain with the AutoInvest option.

To create your ideal investment period, deposit size, and deposit schedule, use the sliders. If you’ve already had a lump sum to start with, increase the figure for the “Initial deposit.”

You will 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.

This estimation is obviously not a guarantee because it is based on past returns.

Talking of the estimated return – this is how Trading212 calculate that, and you can see that you may need to take it with a pinch of salt.

Trading212 AAR Average Annual Return

Using the annualized return of the previous 5 years is flawed in that past experience does not indicate future returns but equally, it’s impossible to accurately predict the real returns that you will actually get in the future.

 

Adding Money to the Trading212 Pie

Another question that is coming up more and more is once you have started the pie, and deposited the minimum recommended amount of 400 pounds into the pie – what do you do when you want to add to a pie?

Fund distribution Trading212

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You are faced with three options here:

  • By targets – this means that as you add to the pie it will add in the same weightings that were set in the original investment of the pie. In the case of the (Almost) Daily dividend portfolio, this means you will be adding to each stock by 2%. It doesn’t matter how much they have gone up by (or gone down by).
  • Self-balancing – this means that as you add more to the pie portfolio it will add more money to the ones that have gone down by and add less to the stocks that have done well. This aims to move the allocation back to the original weightings over time.
  • Custom – this just means you can add to whatever you like however much you like.

 

Fund Distribution – Which Choice Should you Make?

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.

Custom

I would pretty much ignore this option, if you are thinking of doing it this way you are probably overcomplicated with something that should be made as simple as possible (automated investing).

If you are tempted to be custom allocation each time – why not just hold the stocks you like individually and just buying more of them when you think they look overvalued. I don’t see a scenario where it makes sense to be custom investing each month but if you do this let me know in the comments.

Self-balancing

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

For example, if you start with 400GBP and add 100GBP a month, that first deposit you are adding is a 25% increase in your portfolio size just in the first month.

This means that the deposits you add will have a significant enough impact on the balancing of the portfolio you most likely won’t need to do pie rebalances outside of when you add to the pie.

If you are wondering what all this rebalancing business is about then you are in luck as I have written up a whole guide to that already and you can find the guide to rebalancing your portfolio here.

But anyway at first I would just go with the self-balancing option as I add to the pie. It just keeps it simple and is less of a manual effort for the investor.

By Targets

Once your portfolio reaches a level where the additions you are making are not significantly changing the pie total then you can switch to adding by targets and then manually rebalancing (as per the time frame set out in the article I just linked)

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

After 3 years, following the same amounts, you might have reached a portfolio of 4000GBP.

This would be 400 GBP as a starting amount then 100 a month multiplied by 36 months and still want to contribute your regular 100 deposit.

This will now only constitute 2.5% of the overall portfolio and is borderline whether it will be enough to truly rebalance the pie – depending on how volatile your chosen investments are.

So in short self-balancing is fine, if you do it by target allocation you will need to rebalance manually yourself and after a certain portfolio, size self-balancing won’t be enough to balance anyway.

So just a short one today on what all these investing options mean on the pie section of Trading212 but hope that it was useful for you and covered your question!

If you are interested in Trading212 as a broker, check out our Trading212 review to get more details.

Trading212 Review

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dijital pazarlama