Your pies can automatically reinvest the dividend income they receive. The 'Auto reinvest' option is enabled by default, and if disabled, all future dividends will be added outside the pie in your account's free funds.
How and when are dividends reinvested? 🤔
When you receive dividend payments for the holdings in your pie, the funds will stay in the Pie Cash until reinvested. Dividend reinvestment will occur in the following situations:
1. If the amount of cash exceeds the pie’s threshold, the dividends will be automatically reinvested. The threshold value is not fixed, and it’s determined by the lowest target weight within the pie.
Auto-reinvest threshold: 0.1% (of the smallest holding)/100 = 0.001 => £1/0.001 = £1000
Example: the smallest slice in your 50-slice pie has a weight of 0.5% and as the minimum order amount is £1, the auto-reinvest threshold would be £200.
If you receive a dividend payment lower than the threshold, it will not be reinvested. Your pie cash may increase as you continue to receive dividends over time. Once the pie cash exceeds the threshold amount, an investing event will be triggered.
2. During an AutoInvest event, when new funds are deposited into your pie, all the available cash in it will be invested along with them. For instance, if AutoInvest adds £200 to your pie and you already have £1.72 in the cash storage, a total of £201.72 will be invested.
Example: AutoInvest deposits new £200 to your pie and is about to invest them. However, if you have £1.72 in the cash storage of your pie, the total amount of £201.72 will be invested.
3. During a 'Manual Invest' event, when you manually add funds to your pie, all the available cash in the pie will be invested with the newly-added funds. For example, if you invest £200 manually and there is £1.72 in the cash storage, a total of £201.72 will be invested.
Example: You decide to manually invest £200 in your pie. However, you have £1.72 in the cash storage of your pie. A total amount of £201.72 will be invested.
How reinvested funds get allocated?
When it comes to dividend reinvestments, they are treated just like any other investment event. During AutoInvest or automatic investment of reached threshold, the cash from dividends will be allocated based on the targets set for your pie. If the 'Manual Invest' event occurs, the allocation of the cash will depend on the 'Fund distribution' mode you choose: By targets, Self-balancing, or Custom.
How to turn off dividend reinvesting?
You can turn 'Auto reinvest' off from the dividend settings menu. To access it, tap on the 'cogwheel/gear' icon in the upper-right corner of the 'Dividends' section of your pie.