When you invest, you want to be sure that all the cash you set aside is put to work. In too many instances, cash is left to build up in an investment portfolio and goes unused for long periods, which can mean missing out on returns if markets rise.
So, when we were building our Savings Plans feature, we made sure that our service uses all of the portfolio’s cash as standard, automatically. Our clients can set the constitution and weighting of their portfolios, start investing, then sit back safe in the knowledge that their returns are being reinvested for maximum potential gain.
This is why Savings Plans are the culmination of everything we do here at InvestEngine. We’ve combined unbeatable choice and value with powerful automated investment tools, for a service that’s as frictionless as it gets.
Setting up a Savings Plan is easy, just follow the steps in the video below.
Here’s how you can use your Savings Plan to make sure that all the cash in your portfolio is being put to work.
Automate your investing
As your portfolio generates cash, it’s possible to manually invest that money on a regular basis as it accrues. This is, however, a time-consuming process.
With our AutoInvest feature, any unused cash is automatically invested daily. You don’t have to do a thing and our service invests the money according to the weights you choose when you set up your portfolio.
When you couple automatic investing with the flexible, regular top ups that make Savings Plans what they are, you get a powerful way to grow your portfolio over the medium and long-term. You’ll be invested weekly, biweekly or monthly, with any accrued cash being put straight back into markets so your portfolio grows without you having to lift a finger.
AutoInvest is switched on automatically when you set up a Savings Plan – turning it off is easy, though. Just head to your portfolio and you’ll have the option to switch it off right away.
Put your portfolio’s cash to work
Savings Plans also utilise one of our most important features: fractional investing. Put simply, that’s the ability to buy a fraction of an ETF share, rather than having to buy the whole thing.
This means that, if a share in an ETF is worth £60 and you have £30 in your account, you can buy half of the share. If you have £6, you’ll buy a tenth, and so on. In fact, you can invest as little as £1 in any ETF on our platform, regardless of how much a whole share is worth.*
So, you won’t be priced out of the biggest ETFs and you won’t have to wait for your cash pot to build up before it can be reinvested into your portfolio. You can sit back, safe in the knowledge that any cash your portfolio produces is being put to work, every day.
*To be clear, we won’t invest if the pot of cash is less than £1 – it’s not worth it for figures that small!
It pays to get started early
There is a common mantra in investing circles: time in the market beats timing the market. For any investor, the biggest asset you can have is time, and there are a few reasons for this.
Naturally, the longer your cash is invested, the more time it has to grow. We invest because we expect markets to go up, generally, over time – more time in these markets, therefore, means more time to enjoy positive periods.
Time in the market also gives portfolios the chance to benefit from the wonders of compounding interest (interest on interest). As your investments grow, they begin to generate returns. The theory is that these returns then begin to generate returns of their own, creating a snowball effect that we call compound interest. It’s a powerful force in finance and investing earlier gives you more time to take advantage of it.
Finally, a longer time horizon for your investing gives you the wiggle room to ride out any major ups and downs in the markets. No matter what the asset, every investment will have difficult periods – more time means you can simply wait out any rough patches.
It might seem counterintuitive, but the longer you have to invest, the more risk you can afford to take on. A shorter time horizon means lower-risk investments are preferable, so you avoid disinvesting in any significant down period. If you have decades to invest in, you can take on relatively high risk assets that have the better chance of generating higher returns.
So, why wait. Get started with an InvestEngine Savings Plan today and make sure that every penny you invest is put to work.
Capital at risk. The value of your portfolio with InvestEngine can go down as well as up and you may get back less than you invest. ETF costs also apply.
This communication is provided for general information only and should not be construed as advice. If in doubt you may wish to consult a professional adviser for guidance.
Tax treatment depends on personal circumstances and is subject to change, and past performance is not a reliable indicator of future returns.