Drip-feed your cash into the markets – why you might want to use our new feature and how to set it up

The Nutmeg team


4 min read

Not quite ready to invest at the moment but want to secure your 2019/20 ISA allowance early to help maximise your long-term returns? Our new feature gives you the chance to hold money in cash within a stocks and shares ISA wrapper until you’re ready to invest it. When you’re comfortable, you can invest it all at once, or drip-feed your money into the markets month-by-month. Here, we explain why drip-feeding can be a sound investment strategy and show how new and existing customers can set it all up.

drip-feed

The benefits of drip-feeding

At Nutmeg, we want everyone to easily see how they can benefit from widely-accepted investing wisdom and put it into practice. You might have heard us encourage you to invest for the long term so you can benefit from the power of compound returns.

Our new drip-feeding feature is based on another investing principle, called pound cost averaging. It’s all about contributing smaller amounts on a regular basis, which buys you into the markets during the various ups-and-downs, meaning you’re less exposed to short-term market movements.

Find out more about pound cost averaging.

How our drip-feeding feature works

Our drip-feeding feature is available for our stocks and shares ISA and you can use it outside of an ISA wrapper with our general investment accountThis feature is not available on our Lifetime ISA (LISA) or pension right now.

It works by connecting up two Nutmeg pots with a monthly transfer. So, you’ll need two pots – one will be a cash pot, and the other will be an investment pot.

Things you need to know about our cash pots

  • A cash pot is not a cash ISA and isn’t intended to be used for long-term savings – think of it as a waiting room for your cash before it gets invested
  • If you’ve got a stocks and shares ISA, cash pots can be held alongside investment pots within your stocks and shares ISA wrapper
  • Any money added to a cash pot held within your stocks and shares ISA wrapper will count towards your stocks and shares ISA contribution for the current tax year

If you decide a cash pot’s right for you, you can create one and put some money into it from your Nutmeg desktop dashboard. Then, you can set up a regular monthly transfer into an investment pot to drip-feed your cash through to the markets.

Here’s how to get your drip-feed going.

Existing customers

You’ll need to create a new cash pot if you don’t have one already. To do this, you need to log into your desktop account and use the ‘+ New 100% cash pot’ button in the top right-hand corner of your dashboard above your other pots.

Once you’ve followed the process and started a cash pot, it’s time to arrange the pot-to-pot transfer. Go to your cash pot on the dashboard and from the Options drop-down, select ‘Transfer’.

From there, select ‘Recurring transfer’ and choose the cash pot under ‘From’ and an investment pot under ‘To’. Then type in the amount you’d like to drip-feed into the markets each month.

Confirm it, and you’re done. Your first drip-feed transfer will take place on the 1st day of the next month, and will then be invested as part of our next twice-weekly investing cycle.

New customers

You’ve got two options for setting up a drip-feed. You can either choose to start with a cash pot, or you can get an investment pot first and add a cash pot once you get to your dashboard. It’s completely up to you.

Getting a cash pot first

First, choose whether you want a stocks and shares ISA or a general investment account.

 

Then, tick the box shown below and you’ll go on to complete the sign-up process for a cash pot within your chosen product.

ISA-box-ticked

Once you’ve arrived at your dashboard and you’ve got your cash pot, it’s time to set up an investment pot. You can do this using the ‘+ New pot’ button.

Follow the process, and when you reach the ‘Set up your payments’ screen, hit ‘Start’ under ‘Fund this pot from another Nutmeg pot’.

From there, you’ll see the ‘Recurring transfer’ screen. You’ll see your investment pot under To but you’ll need to select your intended cash pot under ‘From’. Then check the amounts to be transferred and edit them if you want to

Confirm it, and you’re done. Your first drip-feed transfer will take place on the 1st day of the next month, and will then be invested as part of our next twice-weekly investing cycle.

Getting an investment pot first

First, choose whether you want a stocks and shares ISA or a general investment account.

Then, leave the box below unticked, and you’ll go on to complete the sign-up process for an investment pot within your chosen product as normal.

Once you’ve arrived at your dashboard and you’ve got your investment pot, it’s time to get a cash pot. You can do this using the ‘+ New 100% cash pot’ button.

Once you’ve got both pots in place, you’ll need to connect them. Go to your cash pot on the dashboard and from the Options drop-down, select ‘Transfer’.

From there, select the cash pot under ‘From’ and an investment pot under ‘To’, then choose the amount you’d like to drip-feed into the markets each month.

Confirm it, and you’re done. Your first drip-feed transfer will take place on the 1st day of the next month, and will then be invested as part of our next twice-weekly investing cycle.

Get started with your 2019/20 ISA allowance today 

Even if you don’t feel comfortable investing right now, we don’t want you to feel as though you have to give up on investing altogether.

Secure your ISA allowance with a Nutmeg cash pot held within a stocks and shares ISA wrapper and you’re perfectly poised to move money into the markets at your own pace, when the time’s right for you.

Get-started

Risk warning

As with all investing, your capital is at risk. The value of your portfolio with Nutmeg can go down as well as up and you may get back less than you invest. ISA rules apply.

 

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The Nutmeg team

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