As we are wrapping things up around AutoInvest we would like to invite you to subscribe and take part in the upcoming beta launch of the feature.
I’ll start by explaining how AutoInvest works. I believe you’ll find it pretty interesting. Also, a detailed user guide will follow up soon in our help centre.
The main goal of AutoInvest is to help you achieve your financial goals by solving two major investing pain points:
- To have a diversified portfolio and easily maintain diversification balance in the long term as markets move up and down.
- To be able to make contributions to your portfolio without having to make complex calculations in order to allocate the right amount of money to each company/ETF you own.
And the best part is that with AutoInvest you can do both automatically! Just set the desired contribution amount and investing frequency, then AutoInvest will do the rest.
Note: AutoInvest won’t interfere with the current functionalities of Trading 212 Invest / ISA. In other words, you will still have the option to invest “manually” by placing orders for individual stocks and ETFs.
Let’s drill down into the specifics.
What is a pie
We decided to call this type of auto-investing portfolio a pie because that’s what it literally is - a combination of stocks or ETFs visualised as a pie diagram.
How to create a pie
Going into the Portfolio section of your account you’ll find that alongside the list of investments there is a new tab called Pies:
Let’s create a pie. Start browsing and make a selection of your favourite stocks and ETFs.
When you’re happy with your selection, proceed to the next step:
Here you’ll get a first glimpse of what your pie will look like. Using the sliders adjust the target weight of each slice (investment) of the pie. Those target weights will determine how invested funds will be allocated within the pie.
Example: You have a pie comprised of two companies - Google and Apple. If you set the target weight of Google to 70% and the target weight of Apple to 30% and invest £100 into the pie, £70 will go towards Google and £30 will go towards Apple.
AutoInvest vs. Manual investing
We decided to give you the option to have pies without using AutoInvest. If you choose to do so, you’ll have to manually contribute funds to the pie. Of course, you can enable AutoInvest later at any time.
If you stick with the AutoInvest option your next step will be to set up your investment plan.
Use the sliders to customise your desired investment duration, deposit amount and deposit schedule. Increase the ‘Initial deposit’ value if you already have a lump sum to start with.
On top of the screen, you have a projection of the potential growth of your pie based on the investment plan you’ve configured and the historical average annual return rate of the pie.
Of course, since this estimation is based on historical return it is not guaranteed.
Personalisation & Review
Give your pie a name and pick the icon you like best.
After you select a payment method the initial deposit will be made immediately and recurring deposits will be made according to the pie’s deposit schedule.
You can also select ‘Account’s free funds’ as a payment method. This means the pie will use the free funds in your account (if available on the investment date). This option will be useful to you if you fund your account via bank transfers. However, you need to schedule the transfers a few days prior to your investment date so they are available in the account on time.
In order to improve the abovementioned experience, we plan to introduce DirectDebit / SEPA deposits which will allow you to connect your bank account to your Trading 212 account and fully automate bank transfers.
That’s it! Your first pie has been created.
What you can do with your pie
Let’s drill down inside the pie and explore what options it offers.
Starting with the ‘Overview’ tab we see the performance of the pie. On the top of the page, we have its current value, the total amount contributed, the total return, and what portion of the pie’s value is held in cash*.
*The amount held in cash will almost always be 0 or very close to 0. It can get higher temporarily, for instance when new funds get deposited into the pie but orders have not yet gone through.
Below you see a performance graph similar to the one tracking your overall portfolio performance. This graph will not be present in the initial beta version, but we will include it shortly after.
Invest / Withdraw funds
This option allows you to add or withdraw funds from the pie at any time even if the pie has AutoInvest on - this will not interfere with the investment schedule. Possible scenario: You’ve set a monthly auto-deposit £500, however, you received a small bonus and have decided to make an additional one-time contribution of £150.
Scrolling down the Overview screen we get to the Dividends section.
Dividends will be auto-reinvested in the pie by default. If you turn that option off dividend income will be paid out as free funds in your account (outside the pie).
You can set a goal to your pie and easily keep an eye of your progress. By default, it is set to the value of your initial value projection, but you can change it at any time.
Switching to the Holdings tab you get a detailed picture of the performance of each individual investment in your pie.
You might wonder why the slices of the pie (in the example above) differ in thickness. As time passes some investments will outperform others. Their actual weight in the pie will become higher than their target weight. As a result, their slice will grow. Other investments will underperform and their slice will shrink.
Looking at Tesla above we see that its target value is 30%, however, the investment has profited more than other investments in the pie and now Tesla’s actual value is equal to 37% of the pie’s overall value. That’s what we call an overweight investment. If the actual value is less than the target value, then we have an underweight investment.
As investments drift off their targets, the pie balance gets shifted. To fix this, at any time, you can rebalance the pie. At the bottom of the ‘Holdings’ section, you’ll find the ‘Rebalance’ option.
The rebalancing algorithm will make the necessary adjustments in order to equalise the actual value and the target value of each investment. It will sell some shares of overweight investments and buy more of underweight investments. You will get a preview before you execute the rebalancing:
Note: Rebalancing may take time if markets are currently closed, or if you have investments on multiple markets and only some of those markets are currently open.
Here you can control everything related to your investment plan. You can at any time:
- change the deposit amount;
- change the frequency of deposits;
- change the end date of deposits.
You can view and modify the associated payment method to the pie.
And of course, you can turn AutoInvest On/Off at any time.
How to join the BETA
If you wish to join the beta and get early access to the feature please sign up here. You will receive a notification as soon as we activate the beta for your account.
The full functionality of AutoInvest will be initially launched on iOS and Android. The feature is coming to the web platform later this summer. If you are using both mobile and web apps, you will still be able to see your pies in the web interface, however, you will be able to make changes only via the mobile interface.