Noob question but I’m doing a regular investment monthly into a pie consisting of mostly US growth stocks. As the share price goes up my average cost also increases so my returns on the portfolio decrease. As an example, one of the stocks (Farfetch) I was up 80% but after my latest monthly top up it’s now only 20%.
Understand that this is just one of the downsides of cost averaging but what do other investors do to maximise their returns when doing regular investing like this?
Does it matter whether I have individual stocks or funds?
Should I top up with the Self Balancing option as opposed to by my regular targets to focus more on the underweight allocations? Or should I do a custom allocation and not top up the overweight (i.e. higher performing stocks).
Or should I just ignore this downside and continue to do my regular investing? It’s just a bit annoying to go from a 20pc portfolio growth to 3pc growth because I’m buying while the price has increased so much.
They say time in the market beats timing. Regular investing is for when you have regular income coming in. If you already have the cash to invest today it should be invested today, not spread out over months
I turned off Auto Invest on my Pie’s for this very reason. I prefer to invest in companies manually on the dips, such as when the market has knee jerk reactions to individual stocks or general world economic news or that sector.
Investing in ETF’s regularly I have no issues with, but individual stocks I’d prefer to be more opportunistic. This may be a flawed rookie mistake, but Im sticking with it for now.
stock prices are random, stock A has dropped 5%, stock B has gone up 5%, which stock will perform best in the next month? no-one knows. I would say don’t get too concerned trying to predict the movements and just make sure to the get the money in regularly. With individual stocks you will always face these dilemmas (when to sell, what is the ‘low’ point, what is the ‘high’ point, why did I sell X? why didn’t I buy more of Y? should I buy stock X or Y etc…) it’s just what you get into when you buy individual stocks and it’s hard to get it perfectly correct.
Thanks. Good to see that others have thought about this also!
I was thinking about ETFs for this reason but I imagine the same issue would arise, albeit for just one stock as opposed to a number of them.
Given that I can’t time the market I will probably just keep doing the full targeted amount as my pie consists of almost 30 stocks and I wouldn’t have the time to check all for price opportunities. I suppose having an ETF would make this easier but prefer stocks over baskets
I’m doing similar to yourself. Started off with a lump sum in March and now adding to existing investments each month. I have portfolio of 25 companies mostly in uk. There all long term investments 3-5 years so not too fussed by I have invested in same company which has gone up say 5%. I intend to hold at least until FTS has reached pre pandemic level before I consider selling some. Some are pretty defensive stocks which looking to hold forever with dividends also. When I first started I was buying and then selling too soon after small gains worried about it dropping. I guess at moment I’m happy adding to investments each month but worried about when I should be looking to sell. Still fairly new at this myself but so far so good for me.
It don’t matter tho.
In the long term, you’ll reach a point where you’re monthly top-up wont be much compared to the whole investment, thus not moving it much compared to you’r % gains.
But even despite that, having a larger investment in you’re pie means that even that 1% gain essentially gives you more $.
So in other words, keep doing what youre doing.
And try to cost-dollor averege when you can, leave a bit of cash to buy dips, i usually buy more shares of a stock in the unusual event a stock of mine drops 10~ish %
Happend with one of my investments today (PACB) which dropped around -15%, got in a good 50 share order at a disscount
i hold several stocks . I buy a small holding if the price drops i buy a few more over time this brings your average price down . As long as you stick to good solid companies . Beware stocks which are in decline the dreaded falling knife scenario . I had a pie but realised quite quickly that i was not for me due to some shares being more expensive than i would like to pay so removed from pie and now just watch the market and buy good solid shares when they drop in price . Good luck in your investment journey
I have a 50 stock pie in isa with weekly paying in. I’ve stopped the auto invest and will manually use that weeks money to buy whichever stock is currently cheapest/has pulled back. For example this week bought fisker, spce baba, draft kings but didn’t buy plug, BLNK, magnite because they’ve shot up recently and are overbought.
They’re all companies I think will grow over time so long term have no worries but maybe you could approach in that way to get the most out of it
