I have a lump sum I’d like to Pound Cost Average from a Money Market fund into a few ETF equity funds, drip feeding it in every month.
What’s the best way to do that from an administrative point of view, in order to maintain the ability to rebalance the equities easily, and have it all wrapped with my ISA.
(I’m also saving in monthly via a direct debit.)
If you’re only looking to move things once a month then the way I’d do it is:
- Have one pot for your money market fund holdings and one pot for your equity fund holdings, each held within your ISA.
- Every time you want to drip some money from MMFs to equities, go to your MMF pot and select “move money”, select the ETF pot and then enter the amount you want to transfer
- Investengine sells the MMFs and applies the proceeds to new equities holdings
I have my account set up to buy new holdings in a way that rebalances (or gets as close as possible to rebalancing) the target portfolio on each investment. As a result, I haven’t ever needed to hit the “rebalance” button. However, with these separate pots, you can rebalance each pot as much as you’d like while keeping everything within your ISA and minimising the period of time you’re holding cash.
Even doing it more frequently, eg daily, should be feasible - I’ve been dripping money from my cash pot into my MMF and equities pots daily for the last few months and it takes about a minute a day. Super easy.
When you say pot, you mean a separate portfolio, right? And I can move money between portfolios easily with that method?
Yes, I just did something similar in the opposite direction (from an IE managed portfolio into MMFs).