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 from your pie's holdings those funds will remain in the cash portion of your pie until they are reinvested.
Dividend reinvestment will occur in any of the following scenarios:
1. The amount of cash in your pie surpasses a certain amount called the 'threshold' (minimum investment). The threshold value is variable and depends on the lowest weight of a slice within your pie.
Auto-reinvest threshold: 0.1% (of the smallest holding)/100 = 0.001 => £1/0.001 = £1000
Example: You have a 50 slice pie and its auto-reinvest threshold will be £200, if the lowest percentage of a slice weight is 0,5% and the minimum value order amount is £1.
Let's say you receive a dividend payment of an x-amount which is lower than the auto-reinvest threshold of the pie and won't be reinvested yet. In time, you may receive more dividends and the amount of free cash in your pie eventually increases, which makes it go above the pie's threshold, and thus an investing event will be triggered.
2. During an AutoInvest event, all free cash sitting inside the pie will be swiped up and invested along with the freshly deposited funds.
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, all free cash sitting inside the pie will be swiped up and invested along with the freshly contributed funds.
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?
Dividend reinvestments are treated as a standard investment event. This means, that in scenarios '1' and '2' described above, cash will be allocated according to the pie's targets. In scenario '3', the cash will be allocated according to the 'Fund distribution' mode you select - By targets / Self-balancing / 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:
