A.I.M. Users Bulletin Board

[OldAIMGuy]

Hi Toof, Re: getting an AIM started, not knowing the future........

A very long time ago when I set up educational savings accounts for my kids I used Twinvest from Mr. Lichello's book (Chapt 15). I didn't have a lump sum to get started, so just let Twinvest get the work done slowly. Eventually I turned off the Twinvest portion and ran those accounts with AIM. There was "equity" and there was "cash" on the day of the switch to AIM so it was easy. I used the value of the equity at that time as the Portfolio Control.

Another version of Twinvest I've used as well. My brother came up with the idea of "Termvest" in which one has a lump sum, but doesn't feel comfortable about just starting an AIM position right now. In this version you determine how long you want to take to phase your lump sum into the market and then divide that sum by the number of months you want to take. So, if you had $12,000 and you wanted it fully into an AIM account in a year, you would divide $12,000 by 12 and use $1000 a month with the Twinvest formula to get it deployed into an AIM portfolio.

Termvest is sort of the Goldilocks way to get started. Not to hot and not too cold. Whether the market moves up or down over the term, it will be deployed appropriately relative to that move and give you something more appropriate than Dollar Cost Averaging for the term. I wrote about this on the old AIM-Users web site, but don't know if others have used it.

I also advised several investment clubs to try either Twinvest or Termvest to handle their incoming money. While the idea fascinated many, I don't know if any of those clubs ever embraced the ideas. My overall suggestion had been to use Twinvest for accumulating a new position and then assign AIM to the final position management. This was just too foreign a concept for most club members. Even N.A.I.C. doesn't suggest holding Cash in any form except briefly when first deposited. NAIC clubs remain near 100% invested all the time.

It seemed such a natural combination to me (who was already familiar with the AIM and Twinvest concepts) but I was unable to convince those used to being 100% invested (and at risk) all the time.