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What caught my eye this week.

A reminder that platform consolidation continues apace. Monevator readers have noticed a Legal & General statement on logging into their accounts stating they’re set to be transferred to Fidelity. Meanwhile EQi has emailed me – and I presume others, unless it thinks I smell – to confirm my account is to be spirited away to Interactive Investor.

The L&G move is the result of a £5.8bn deal struck last October. After the handover, Fidelity will administer the 300,000 accounts it acquired in the deal, but your money will remain in L&G’s funds. You can also choose to invest in a wider range of other shares and funds, too.

Fidelity claimed when the deal was struck that acquired customers would pay “the same or less”. You might want to run the numbers to check this, though.

I must confess to a bit of sentimental sadness about this particular platform consolidation. L&G was the first place I invested my money, nearly 20 years ago.

End of an era!

Twist and shout

As for the tricky Scrabble hand that is EQi-to-II, I’m not hugely upset.

Interactive Investor offers cheaper share dealing than EQi and the assets being transferred are chunky enough for me to benefit from its flat fees.

So no need for me to hunt for a cheaper alternative using TA’s peerless – albeit eye-straining – broker comparison table just yet.

Still, it’s a bit annoying.

EQi deleted some of my old Selftrade records when it took over the latter a few years ago. That meant hassle with unsheltered holdings. I’d prefer it hadn’t bothered, given it hasn’t stuck around.

There was a Know Your Customer faff, too. I hope that doesn’t happen again.

Penny Lane

Who will win as this platform consolidation plays out? How many will win? Will the winners include you and me? What will we be charged?

It all seems up for grabs.

For example I like the super-dominant Hargreaves Lansdown, both as a platform and as a monster business. But I recently sold its shares. I fear its fat margins will be squeezed by competition from the likes of Freetrade.

At the same I’ve considered upgrading my Freetrade account to the ‘Plus’ offering. This would give me access to lots more shares as well as some other good stuff – including an ISA wrapper – at a cost of £9.99 a month.

Freetrade also recently launched a SIPP, again at £9.99 a month. The gap between the legacy and upstart platforms is shrinking.1

While still very competitive versus rivals, we’re not quite talking free investing anymore. At the least, sensible investors will want to lay down £3 a month for the must-have ISA tax shield.

The Freetrade platform is slick and modern. For an active investor like me it is liberating to shuffle a portfolio around without the friction of dealing fees.

So I see plenty to like, even with some extra costs. Which is heartening, given I’m a Freetrade shareholder…

However these add-on charges highlight that there will surely be some minimum cost wherever you go at the end of this platform consolidation – at least for those who want to deal in a wide range of securities.

Free as a bird

Fair enough – everyone has to make a living and we hardly want to keep our lifesavings with brokers who can’t afford to protect them.

But does such an inescapable cost mean Hargreaves Lansdown’s margins are safe?

You’d think maybe not, because its fees for share dealing might still look egregious compared to £0 trades with Freetrade and others of its ilk.

Yet Hargreaves just reported profits boosted by rampant customer share trading!

Maybe its wealthier customers don’t mind stumping up? Perhaps they’re happy to pay a premium for its very well-established platform, and the reassurance of its great reputation for customer service?

Maybe – but how much of a premium?

I think it’s fascinating watching the industry’s combination of consolidation, competition, and cost obfuscation playing out like this.

Especially as fresh competitors will keep emerging.

For instance the 14-year old Israeli broker eToro this week announced it will go public in the US in a $10bn ‘SPAC merger’ deal. The social trading platform already operates in the UK, but it could do so with a bigger warchest if backed by a lofty market valuation.

How could that affect the incumbents?

Don’t let me down

Remember you can try Freetrade by signing up via my link and we’ll both get a free share. You don’t have to pay for those premium features, unless you want them.

I don’t just keep inserting my link to Freetrade for the freebie share – though that’s clearly part of it! Nor even because I’m a shareholder.

I really do think everyone should give one of these modern trading apps a go. You might be surprised how fluid they feel. I was.

Anyway, have a great weekend. This time next Saturday we’ll be on the eve of our first post-lockdown mini-garden parties in England…

From Monevator

How to automatically donate share dividends to charity – Monevator

How I lost £436,957 trading Tesla shares – Monevator

From the archive-ator: Index tracker costs to watch out for – Monevator


Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!2

UK government borrowing hits February record – BBC

Cornwall overtakes London as most searched for location for movers – Guardian

Treasury raises £1.1bn in Natwest share sale; taxpayers still own 59.8% – ThisIsMoney

IR35 tax change for the private sector begins 6 April: are you affected? – Which

Scottish Mortgage Trust’s James Anderson to retire next year – Portfolio Adviser

Slipping? Retirement income prospects for Generation X [Report, PDF]ILC

The rout in long government bonds continues to roil the tech sector – FT

Products and services

Royal Mint gold rush causes chaos for customers – ThisIsMoney

AirBnB offers estimate of what your home would rent for [Top left]AirBnB

We both get £50 to invest at Seedrs if you sign-up via my link and invest £500 in 30 days – Seedrs

Yorkshire Building Society first to bring back 95% mortgages – Guardian

10 surprising facts about Bitcoin – The Big Picture

Eco-friendly homes for sale, in pictures – Guardian

Comment and opinion

A candid account of another early retirement gone wrong – LivingaFI

Will the inflation dog bark? – Real Returns

“I can’t possibly afford it”: how Covid dashed retirement dreams – Guardian

Bond declines ain’t so bad – The Irrelevant Investor

Get rich versus stay rich – The Belle Curve

Twelve truths – Humble Dollar

‘I gambled £50,000 on a horse and lost everything’BBC

Larry Swedroe: Have you been framed? – The Evidence-based Investor

Don’t worry be bullish mini-special

How to stop carrying too much financial anxiety – Incognito Money Scribe

Most people would be wise to assume markets rise – Of Dollars and Data

Ray Dalio and the power of setting defaults for optimism – AWOCS

Naughty corner: Active antics

Deliveroo offers retail investors a slice of the IPO action [Search result]FT

Donkeys – Enso Finance

A chat with Ted Seides, author of Capital Allocators [Podcast]Meb Faber

Analyst anchors – Klement on Investing

Is quality on sale? – Validea

The new Credit Suisse Global Returns Yearbook is out [PDF]Credit Suisse

Covid and politics

UK death rate ‘no longer Europe’s worst’ by winter – BBC

Report finds small number of Facebook users responsible for most Covid vaccine skepticism – Guardian

My mum believes in QAnon. I’ve been trying to get her out – BuzzFeed

Marina Hyde: How long until the next Priti Patel brainwave? – Guardian

Kindle book bargains

Business Adventures: 12 Classic Tales from Wall Street by John Brooks – £0.99 on Kindle

Money Saving Book: Simple Hacks for a Happy Life by Holly Smith – £0.99 on Kindle

Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist by Kate Raworth – £0.99 on Kindle

Billion Dollar Loser: The Epic Rise and Fall of WeWork by Reeves Weideman – £0.99 on Kindle

Buy a Kindle and you can sell all your leather bookmarks on eBay for cash!

Environmental factors

Government sets out £1bn plan to cut industrial carbon emissions – BBC

Gen Z’s high-speed rail meme dream, explained – Vox

Sperm whales in 19th century shared ship attack information – Guardian

Off our beat

The Great Amazon flip-a-thon – New York Times

Will I ever work in an office again? – Guardian

American Special Op forces are everywhere – The Atlantic

What happens when a firm introduces a five-hour workday – Fast Company

The things we go back to – Seth Godin

And finally…

“There’s zero correlation between being the best talker and having the best ideas.”
– Susan Cain, Quiet: The Power of Introverts in a World That Can’t Stop Talking

Like these links? Subscribe to get them every Friday! Like these links? Note this article includes affiliate links, such as from Amazon, Hargreaves Lansdown, Interactive Investor, and Freetrade. We may be  compensated if you pursue these offers – that will not affect the price you pay.

  1. If you open a SIPP you also get a 30% discount on Plus. []
  2. Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”. []

How I lost £436,957 trading Tesla shares

Image of Elon Musk with the caption Totalling Tesla

I sold my Tesla shares too soon, for spurious reasons. It’s the biggest single investing mistake I most regret.

Anyone who picks stocks or studies active fund performance will know how a few multibaggers can drive the total return.

Indeed critics of active funds often point to such out-sized gainers and cry “luck!”

But we should see owning multibaggers in our portfolios as a feature, not a bug.

A multibagger is a share that goes up by multiples of what you paid for it.

For instance, you buy into Monevator PLC at £10 and sell at £20.

That’s a two-bagger. The share price doubled.

If you hung on and it hit £50, that’s a five-bagger to boast about on Reddit.

Passive investors, too, will see multibaggers driving returns at the index- level. Some (disputed) research suggests only a tiny handful of stocks are responsible for the majority of the market’s long-term gains.

How often in 2020 did we see charts like the one below from The Financial Times? Usually alongside warnings that a handful of giant tech firms – the FANGs – were behind the market’s advance:

FANGs to market: bite me

Pundits warned that mega-cap multibaggers like Apple and Amazon had grown to represent a massive share of the S&P 500.

Well… good!

Passive investors are lucky their robot funds aren’t subject to the whim of a human manager musing how: “Nobody ever got fired for taking a profit.”

Maybe not – but selling winners can still be bad for their clients’ wealth.

How I messed up with the stock of a lifetime

The good news is you don’t need to pay a career risk-dodging fund manager to lose out by selling multibaggers too early.

No, with enough time, money, and stupidity you can do it yourself.

Just (please don’t) ask me about my Tesla shares.

I’ve put off publishing this article on how much I lost trading Tesla shares for months now.

Not only because at Monevator we believe most people should be passive investors in index funds – and I’m about to show you another reason why.

And not even because it’s embarrassing.

No, mostly it’s because I’ve had to keep re-editing the headline.

  • When I started writing I’d lost around £388,000 trading Tesla shares.
  • As I edited the draft my losses hit a peak of £436,957.
  • Then the share price fell and I was only £402,000 out of pocket.

This shifting loss isn’t because I was trading thousands of Tesla shares every day on Freetrade.

And I wasn’t doing anything so dumb as shorting a great company. (That’s best left to hedge fund geniuses.)

I was a fan of Tesla for a decade and a proud shareholder for most of it, too.

So how I lost nearly £437,000 trading Tesla shares is that in December 2016 I owned shares that would have been worth that much in 2021.

But – dolt that I am – by then I’d sold them all.

Missing multibaggers

Now I know what you’re thinking.

You reckon I didn’t really ‘lose’ money trading Tesla shares – no more than your gran lost money by not buying shares in fancy pants firm Lululemon.

Or than you lost money because you didn’t buy Bitcoin in 2010.

I take the point. There are an infinity of missed opportunities out there.

But the opportunity cost I’m talking about with me and Tesla is different.

Roughly 99.99% of people didn’t know anything about Bitcoin in 2010. If you did you probably called it bollocks.

That was why you (and I) didn’t buy Bitcoin back then.

As for your 79-year old grandma getting into Lululemon…let’s not go there.

But the sad reality is I did own Tesla shares. This isn’t a hypothetical.

I hugely admired the company and I judged early that Tesla could be worth at least $100 billion someday.

Indeed I’m as close to an Elon Musk fanboy as a rational, slightly envious middle-aged curmudgeon can be.

Yet I still sold my Tesla shares.

Omission versus commission

When you’re a naughty active investor like me, the profits you miss are as important as the losses you inevitably book.

They’re all mistakes. They all count. Even if the gains foregone are hard or impossible to calculate.

As the old G.O.A.T.1 Warren Buffett says, your sins of omission (i.e. what you don’t buy) hurts your returns far more than your sins of commission (i.e. those investments you do make that go down).

The most you can lose on a particular stock is 100%.2

But the upside is theoretically unlimited – as Tesla been demonstrating:

Tesla: from nearer-nought to nearly $900

At their peak in January 2021, Tesla’s shares cost $900, up from $48 at the end of 2015.3

That’s nearly a 19-bagger in five years!

This asymmetry in the downside of loss versus the potential for uncapped gains is why selling can be so costly.

Monster gains will make up for a myriad of flops in your portfolio.

My missing Tesla shares

The good news is I do own Tesla shares today, even after my idiocy.

The bad news is I owned many more just a few years ago.

How many? Let’s step back in time.

It’s December 2012 and I’m minding a friend’s house in the country.

It’s a big house, and it’s snowing outside. There’s even a log fire!

All very Dickensian, and like in all Dickens’ most popular novels I’m considering making an investment in an electric vehicle start-up.

Specifically, I’m reading about Tesla and how it’s hated by the market.

Some doubt Musk. Some say only nerds will ever want electric cars. Others concede electric cars are the future, but they doubt Tesla.

I see risks, too, but also immense potential.

By 2012 I’ve been tracking solar energy for years. I believe a turning point in the economics is approaching.

As for Tesla, by December 2012 CEO Elon Musk was a proven entrepreneur – something ignored by his critics, who inexplicably call him a fraud.

And Tesla’s second car, the Model S, was out to rave reviews – a fact brushed off by Tesla’s critics, who inexplicably call the firm a sham.

Technology and growth shares languish in late 2012. People are crazy for gold miners and dividend payers.

My contrarian senses are tingling.

So I bought some Tesla shares. Just a few, due to the risk, priced well below $10 a pop.4

We don’t need to be precise – because within a month I’d sold them!

Yep, I’ve bungled owning Tesla shares more than once.

Happily though, I bought back into Tesla shortly thereafter.

What I thought people had wrong about Tesla

The value of my Tesla shareholding pretty much doubled in a few months.

But I just sat on them. I ignored the controversy and the high-profile shorting and the prophecies it would go bust.

I was never very concerned about Tesla running out of money, for two reasons.

Firstly, the world is awash with cash looking for returns. Yet the fastest-growing companies of our time don’t need our money to grow.

Tech giants like Facebook and Alphabet are asset-light and cash-rich. Unimaginable profits have been made with very little capital, turning the notion of capitalism on its head.

Tesla though is old-fashioned in that it needs vast amounts of capital to build factories to make batteries and cars, as well as to write software.

This was touted by bears as a weakness, but I saw an opportunity.

Provided Tesla kept demonstrating progress, I believed capital would flood in to profit from a rare modern industrial-sized scale-up.

Secondly, I heard one of Alphabet’s founders say he thought the best use of his billions might be to give it to Elon Musk.

Many others in Silicon Valley also admired Musk as a one-off genius.

I saw this as a ‘put’ on Tesla’s solvency. I believed Tesla could go nearly bankrupt at least once, yet be bailed out by Elon’s billionaire buddies.

Rightly or wrongly, this belief was an uncommon insight (I don’t claim unique) that I had versus the market.

Of course I loved the cars and the mission and Tesla’s roadmap.

But my contrarian beliefs on funding were my thesis for being long Tesla.

How much?

I held Tesla as the cost of renewable energy fell, climate science became consensus, and as Tesla made more cars.

For capital gains tax management reasons I did trade around my position in 2016. I defused some of my unsheltered Tesla position and bought back in a tax efficient account. My shareholding fluctuated.

But my records show that by December 2016 I held 670 Tesla shares.5

Let’s count my pseudo-losses from there.

Mr Market makes a fool of me

My first mistake was I sold some shares in 2017, for reasons I can’t recall now. Most likely I wanted funds to buy something else.

But what eventually did for my entire Tesla shareholding was my growing concern about Elon Musk’s mental state.

Unlike most people nowadays, I don’t expect public figures – let alone geniuses – to live their lives without warts and all.

Have you met other humans? Looked in the mirror?

We all have flaws. The only difference is most of us are not tracked 24/7.

All the great artists, business people, and politicians of history had quirks at best, and at worst, much worse. They were lucky to be born before Internet pile-ons.

So I wasn’t worried that Musk was outspoken or eccentric.

However I was concerned that by 2018 he seemed to be struggling to cope.

Investing in Tesla for me was betting on Elon Musk. My thesis was that his friends and admirers would support him, at the last resort.

But if Musk himself was impaired then that went out the window.

During 2018 Musk trolled the regulatory authorities, suggested he’d take Tesla private in a random Tweet, and started a bizarre name calling bout with a British cave diver, among other things.

My concerns compounded. I was still enough of a believer to actually buy more shares when Musk made his infamous funding secured Tweet in 2018. But eventually I started to see his antics through the eyes of his critics.

I sold all my shares.

I’m not going to dwell on my reasoning any further. I made lots of bad investing decisions in 2018 and most of 2019. I had a big mortgage for the first time in my life. It screwed with my judgement for a while, I suspect. It made me fearful.

The bottom line is that by June 2019 I was completely out of Tesla.

Oops! There goes a 100-bagger

Turned out I’d pretty much bottom-ticked Tesla’s share price fall. It began to recover right after I sold. Good news seemed to come daily.

Even better – especially if you hadn’t recently sold all your shares in his baby – Musk was stabilizing. Still eccentric and insufferable to some, but to me he looked like he was having fun again.

And so the pain of trying to buy back into Tesla began.

Probably the only thing worse than selling out of a multibagger is regretting doing so just as the price goes parabolic.

That Tesla graph again, once more with feeling:

When you’re price anchored to the seabed

Buying most of the way up Tesla’s ascent was profitable – with hindsight.

But good luck biting the bullet if until relatively recently you had a cost basis of under $10 a share. The struggle is real.

I dithered for months but did eventually start to buy back into Tesla. I paid as much as ten-times the price where I’d sold. Or nearly 100-times above where I’d first bought Tesla in late 2012.

For a while I also had exposure via Scottish Mortgage Trust, which I bought during the Covid crash. It owned a garage full of Tesla, and rallied hard, too.

Exaggerated accounting

I traded around my new Tesla position and I’m up well into five-figures from its crazy stock price rally, all told.

So my talk of a £436,957 ‘loss’ from trading Tesla shares isn’t really accurate.

Especially as I’ve also ignored the gains I made from initially selling Tesla. I didn’t sell my shares for nothing!

I’ve also not accounted for what I made from reinvesting that liberated money. Most boats have risen over the past couple of years, after all.

But life is too short for all that maths when this is a story, not an academic paper. My aim was to give an illustration of the cost of missing multibaggers.

These things happen if you invest actively. You’re hearing from a man who once sold ASOS at around 30p. Today it’s more than £55.6

But the fact remains I really would have more than £300,000 in Tesla right now – even at today’s much lower stock price – were it not for my mental wobble.

That would have been enough to buy half-a-dozen Teslas. From investing less than £20,000.

Let that be a lesson to you – and me – and all that malarkey. Harrumph.

Luckily I’ve managed to hold on to other stocks that have multiplied in value, so don’t miss my follow-up on multibaggers. Subscribe to ensure you see it!

  1. Greatest Of All Time. []
  2. Assuming you’re not levered – that is, you’re not borrowing to invest using margin. Leverage is a right/wrong multiplier, so you better not be wrong! []
  3. Tesla shares were split five-for-one in 2020. This split has no direct impact on valuation. Shareholders got five times as many shares they previously had, and the share price fell 80%. The idea of such a split is to make the shares more liquid. I use split-adjusted prices throughout this post for simplicity. []
  4. Again, as throughout, split-adjusted. []
  5. Again, as throughout, split-adjusted. []
  6. Disclosure: I hold. []

How to automatically donate share dividends to charity

Logo for DIY Dividend charity machine

Here’s an elegant way to donate money from share dividends to charity in perpetuity, from Monevator reader Reza. With this guest article neither Reza nor we at Monevator are saying this is the best way for everybody to donate money to charity. But we do love the thinking behind the ‘donation machine’ concept. Over to Reza…

While reading American Psycho by Bret Easton Ellis, I took a break due to how grim it is. During my break, I began to look into homeless statistics and came across the Crisis website.

Crisis is a charity that directly helps homeless people find a home. It also campaigns for changes to solve homelessness altogether.

After browsing through the Crisis site and learning more, I spotted its investor page. This introduced me to the concept of Social Return on Investment (SROI).

My understanding of SROI is that by donating money, you are making an investment in society that yields dividends and/or savings through a compounding effect.

Crisis and other charities conduct research to provide estimates on the value that a donation makes.

For each £1 you invest, Crisis estimates an impressive SROI of £3.30.

The return on investment here comes from helping people to find homes and providing them with the support they need. This makes it more likely an individual will escape from their homeless circumstances and that ultimately they will start to pay taxes.

Conceiving a ‘machine’ to donate share dividends to charity

It all got me thinking of stocks and shares investments in relation to charities. 

I soon hit upon the idea of a set of shares that are dedicated to perpetually creating money for charity. That was something I found very appealing.

How do shares generate money?

When you buy shares you are buying a piece of a business. Some of these businesses distribute cash to shareholders in the form of dividends.

Dividends are typically paid out periodically – usually a few times a year.

Although not all companies distribute dividends, many do.

It’s also important to know that the dividend payout can fluctuate, just like the share price.

Why make a ‘machine’ to donate money?

I believe my idea to automatically donate share dividends to charity could appeal to other Monevator readers for a few reasons.

The machine perpetually generates money

The key benefit is that once you have created your set-up to donate dividends to charity, in theory it should generate money indefinitely.

Share prices go up and down, but British companies are pretty good at paying out increasing dividends over the long-term.

A good way to take advantage of this is through a low-cost ETF that sports a good dividend yield.

When you invest in an ETF, you are buying into a group of companies. For example, if you bought a FTSE 100 ETF, you would be buying a slice of every company in the FTSE 100.

With an ETF you do not rely on a single company to dish out the dividends. Your risk and expected dividends come from many different businesses.

You can build up the machine over time

To make your machine more powerful, you simply add more cash to it.

By periodically adding money and buying more shares, the dividend payout should increase over time. This will mean more cash to donate to charity.

You still have a lump sum if you need it

With my approach, you retain control of your lump sum in a broker’s account. You can call upon this if things go really bad and you need cash.

However, let’s stay positive and go with the plan of never needing to touch it. Hopefully it will continue generating cash for donation for a long while.

The donation machine should grow by itself

Share prices and dividends, in aggregate, have in the past increased over time. So we should find that our machine gets more valuable and generates more cash as the years go by.

Building the core of the machine

Here are the steps involved to get this project off the ground:

1. Open a cheap brokerage account (just for charity donations)
2. Deposit cash into the account
3. Purchase some shares (I chose Vanguard ETFs)
4. Set dividends to be paid to a bank as soon as they arrive
5. Bank transfer that cash over to your chosen charity

My results: One year on

It’s just over a year since I set up my own donation machine.

Although I haven’t yet got everything automated and I’m still involved in the process, it otherwise looks to have been a success.

My chosen ETFs have increased in value by around 12%. And the machine has generated just over £30 in dividends to donate to charity.

The cash from dividends was moved from the brokerage to a bank account and from there I transferred it to Crisis.

If we plug £30 into Crisis’ SROI calculation (£30 * 3.3) it equates to a £99 impact from the donation machine in its first year of operation.

Okay, humble beginnings, but not a bad start. As dividend growth kicks in and I add more funds to the pot, my machine should deliver a larger round of dividends in year two.

Hopefully it will continue to grow from there!

Towards a truly automated donation machine

Currently my donation process is manual.

I take a look at the brokerage account occasionally and check if any cash has been generated. If cash is available I move it to my current account and then I do a bank transfer to the charity.

So the outline of a perpetual donation machine is there. But the implementation is not.

However I have a clear idea of how I can completely automate the entire process.

Here’s what I need to do to assemble a truly automatic solution.

Parts required

In order to automate this, a few things are going to be needed. Namely a broker, a bank account, and of course the charity you wish to donate to.

My bank of choice is Starling. The primary reason for this is that Starling offers something called an Application Programming Interface (API).

With this API, Starling provides a toolkit that enables you to write computer programs that interact with your bank account

Other banks do offer APIs, but where Starling really stands out is that it allows you to make payments – to existing recipients – by using the API.

My broker will be Vanguard Investor and the account would be an ISA.

The key reason for choosing a Vanguard ISA – other than those previously covered by Monevator – is that Vanguard allows dividends to be automatically transferred to a bank account as soon as they are paid.

To find this, look under My profile > Product > Edit > Distribution and then Dividends options.

Surprisingly, this is not a ‘flick of the switch’ option on all brokers.

From my own research, it appears to be completely absent in the AJ Bell YouInvest control panel, for example.

Lloyds and Halifax do have quite flexible automatic payout options – quarterly, annually, or as soon as dividends are paid – but it appears cash can only be automatically paid out if you have a bank account with them.

Finally, you need a charity. My choice for now as I said is Crisis.

I sent a short email to Crisis explaining that I would like to donate by bank transfer. It promptly replied with the details required: account name, number, and sort code.

I am sure other charities would respond the same way.


Now we have all the ‘parts’ needed, the next step is putting them together.

The first step is to link the current account with the brokerage account and confirm that it enables both withdrawals and deposits from the current account.

Next, transfer some cash into the brokerage and purchase a fund that distributes dividends.

Set the ‘Distribution and dividends’ option to ‘Pay to My Bank Account’, so as soon as dividends are paid they leave the broker for the bank.

Moving over to the current account, the charity would need to be added as a payment recipient in order that payments can be made.

This setup now allows for dividends to be automatically paid into a new bank account periodically.

All that’s left is to automatically pay the charity when cash is available.

Things now becomes slightly more complex. I will need to write a small computer program that interacts with the Starling bank API balance and payment endpoints.

I won’t go into the nitty-gritty as it’s more important to convey the process itself.

The program needs to:

1) Check if there is cash in the bank account
2) If you do have cash then transfer it to the charity
3) Send a notification that the donation has occurred

Below is some top-level pseudo code – in reality the program would be perhaps a few hundred lines long – showing how it may look.

If balance > 0:
    donation_amount = balance
    make_payment(charity_account, donation_amount)

This program will need to be carefully tested to check it’s working correctly. Once it looks good, scheduling the program to run daily on a server would be the last step.

With all that done, we would have an automated system that creates and donates money to charity. Wonderful!

A taxing matter

When I discussed this idea with The Investor, one topic he raised was tax relief and how to go about claiming Gift Aid.

This was not something I had considered, but it shouldn’t be a problem.

With Gift Aid, a charity gets an extra 25p for every £1 you have donated (or that it raises from selling your donations).

Making a Gift Aid declaration for the charity to claim with our donation machine could be quite straightforward.

If you’ve ever brought things into a charity shop to donate, you will already be familiar with the routine: “Would you like to do a Gift Aid declaration?”

Doing so takes barely a minute.

Handling Gift Aid could be be a snap in the automated program, too.

You may notice a line in my code above saying:


The idea behind that is to let the charity know you have made a donation with a bank transfer. You could include a Gift Aid confirmation here.

Next steps and final thoughts

There may be other brokers out there offering greater dividend payment flexibility so that the program and/or bank account stages are not needed.

However I have not personally come across one.

I’m hoping to write the automation program in the near future. When I do so I will make the code publicly available.

In the meantime, the businesses in my donation machine’s ETFs are busy ticking away producing the next batch of dividends.

This system provides me with some much-needed structure around the way donations are made.

There is now no question about how much and when to donate to charity because all that is determined by the dividends. It’s also something I look forward to building on.

And of course it’s rewarding to see the cash generated by the dividends being sent towards good causes!

Any comments about this way to donate share dividends to charity are very welcome. Hopefully I can incorporate any suggested improvements in the future.

The Investor again! I love this idea. It may seem a slightly complex way to donate share dividends to charity, but I believe the idea of growing a donation machine over time will appeal to others with the ‘snowball’ mentality, too. The idea of putting more money into my own donation machine whenever I have spare cash and then seeing it grow in earnings power and impact over the years hits the spot for me. As Reza says, the cash is still there if you need it – so unless and until then you could potentially put more money towards charity than you otherwise would with a one-off contribution. You could also end up with a chunky final bequest for your favorite good cause! Please be gentle with our guest author, but otherwise let us know what you think in the comments below.


Weekend reading: Coinbase cashing in

Weekend reading logo

What caught my eye this week.

Perhaps it’s too early to tell what category the Coinbase IPO falls into.

The companies that choose to go public in a mature stock market boom often make interesting watching.

At one extreme you get the flakier – sometimes borderline fraudulent – firms cashing in on giddy investors who’ll pump up the price of anything.

At the other end you have demonstrable juggernauts and cash cows. Very successful companies that float because… if not now, then when?

Roblox – the computer game creation kit that’s bewitched a generation of kids – and Bumble – the dating app that’s sowing the seeds for the next-generation – come to mind.

Coinbase is coining it

With many investors still skeptical that they should own any cryptocurrency, the public listing of the dominant platform in the space may well seem chum for the credulous.

On the other hand Coinbase has already been valued at around $100bn, pre-IPO.

That’s a loot of moolah for a firm trafficking in supposedly made-up money.

Clearly, present conditions seem exuberant for blockchain technology.

Bitcoin flirted with a new high near-$58,000 this week. Coinbase boasts $90bn in assets under administration. And the NFT (non-fungible token) craze continues, as I cover in a second mini-special in our links this weekend.

I wonder why Coinbase is IPO-ing right now?

I would suggest anyone interested in learning more about cryptocurrency has a read of the Coinbase’s S1 filing. This pre-IPO document is a primer on the entire crypto ecosystem, with pretty graphics and all.

You could also check out The Conventional Investor’s Guide to Bitcoin, published by Morningstar this week.

Can Coinbase cut charges?

I don’t think I’ll be racing to pick up Coinbase shares. I like and use the business, but I can’t stomach the forecast valuation.

Coinbase’s fee margin is enormous, and seems unsustainable. It’s not clear to me whether it can achieve the scale presumably needed for fees to come in closer to what we’re charged for trading securities on other platforms.

Still, $100bn eh? That’s almost as big as Lloyds, Barclays, and Natwest combined!

Have a great weekend everyone. Hope you manage to legally meet a chum for a coffee on a park bench somewhere.

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