Pies 🥧 and how shares are Purchased

Hi All,
Can someone explain to me the benefit of Pies over individual trading of stocks?

Is it purely a management tool, so its easier to track & invest in certain sectors? i.e. Tech Pie, Energy, Financials?

I am trying to make sense how the AutoInvest option works, for example, if I had a Pie with only two stocks in it, both set to 50% and I invest £100.

Where does that £100 go? does it just add up in my free funds available for that Pie? OR does the Pie help automate purchasing addition stocks in these two companies using £50 each? and how do you set what your desired automated buy price is for each stock if so?

You see I understand the concept of the Pie, just not how the application of using them is better, and the main question I am asking is, can you set it to automate purchases of additional shares using the funds autoinvested in that pie or is that still a manual process?

Thank you

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Hey Scott,

The way I’d sum up pies is a means to have a portfolio with as little emotion at play as possible. Cost averaging is the best way to make the actual returns of the market, lowering the risk of underperforming, but hence also reducing the chance of outperforming the market.

If you want complete control of your investments, auto-invest and pies doesn’t really help you there. Auto-invest (for now) will just buy instruments at the allocation you set for them. If you want to buy at the lows, self balancing pies (only through manual deposits) may work better. This is because in a balanced pie, if one stock drops £5 and the other goes up £5, putting £10 in will all go towards the fallen stock which is theoretically at a better value now.

If this still isn’t enough for you, you can manually invest the funds into whatever stocks you want. So you can go through your portfolio and pick which stocks you want to buy that day and allocate the funds only to then. This speeds up transactions, as you don’t need to place individual orders, just one collective order.

If you’re looking to buy at specific prices and watch the graphs etc., then pies aren’t going to help you do that. They’ll just buy with a market order as there are not limits in pies. But this doesn’t make pies completely useless. What you can do is use pies to organise your portfolio. You can make pies for sectors, or growth vs income for example. Then you can keep an eye on the balance of your portfolio. You can place the orders outside the pie and then just simply import the shares after.

So it all depends on your goals and your investing style. For me, as I show on my YouTube Channel, I basically cost average but I do like to find value sometimes. Pies stop me from buying an already overweight stock. And most weeks I just invest in all my stocks using self balancing (which doesn’t buy all my stocks, usually just 1-5 which are really underweight in my pie).

To answer your questions I didn’t fully touch on:

With auto-invest specifically, it will simply split your funds to their targets. And that’s it. You can rebalance to try get the pie to be balanced but that’s it. With manual deposits, you have that choice or self balancing or manual investing as I said above.

For your last question, I’m assuming you’re talking about dividends? If you turn dividend reinvestment on, then once your dividends reach the minimum deposits amount (see below) it will automatically buy more shares by the targets. If it doesn’t reach the minimum by your next deposit, the dividends will be invested along with the next deposit.

For the minimum amounts, each share requires a minimum of £0.20 to invest. . So if your smallest slice is 1%, then you’ll need £20 minimum, as £0.20 x 100 is £20.00. 0.5% x 200 is £40 etc.

I really hope this helps, pies are a great thing but I know they’re not for everyone, but they can assist your investing in a variety of ways!

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Hi @cavanhagan, thank you for the detailed response. You may have lost me a little in the detail though as I am still quite new to trading.

Am I right in thinking that money AutoInvested in to a Pie via say direct debit is used to just purchase new stock automatically at the current market price and you have no influence over setting a buy price it invests that money in when it hits a set limit price?

When you say autoinvest splits your funds to their targets, does it purchase stock in the instruments automatically? and does it grab fractional shares if it doesn’t have enough funds to purchase a full share?

I apologise for my lack of understanding to your detailed reply. Thank you for taking the time to respond.

Scott

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Sorry, I didn’t take that you were a new user from the question, sounded pretty confident.
You will find the help centre very helpful then for the basics. Here’s the links to pies:

Yes you’re right, you have no control, it will order as soon as the money goes through.

And the pie tries to invest as much of the money as possible, so it will spend every penny to the lowest fraction possible. So the odds of it buying a “whole” share is slim to none.

If you’re still confused then you might be interested in my walkthrough video I made. It’s really old and lower quality than my videos now, buts it’s actually my top performing video lol!

Once you get an understanding of how it all works, my original response will be really helpful when you’re deciding how to use pies. But as a newbie, I’d recommend using self balancing through manual deposits, and just letting it do the work for you! Just fill it up with ETFs and some stocks you like. Good luck with your investing! :slight_smile:

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I’m also a bit confused with this, I have Discalculia so I tend to struggle, to put it simple I thought for example if I had 10 shares in a pie and I have a figure of say £20 to autoinvest every month.
I am under the impression that £20 is split in to those 10 shares like £2 to each share no matter if it is gaining or losing.

Assuming each of the 10 shares has a 10% target, autoinvest will give £2 to each every time

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Pies are much more useful for investing than trading because shorter-term price fluctuations don’t matter nearly as much.

They’re particularly useful for ‘passive’ investors. For example, I could set T212 to auto-invest 90% in the S&P 500 and 10% in short-term gov’t bonds–an allocation advocated by Warren Buffett.

Other than hitting the rebalance button once a year, it’s more or less set and forget. Such a portfolio would cost about 0.05% a year and beat most active investments in the long run.

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