A.I.M. Users Bulletin Board

[jaiml]

hi Allen,

hen we would have 20% in a good/better than US Treasury bond, maybe an A+ corporate bond, 40% on SSO or equivalent, and 40% in TIPS or maybe something like HSBC with a maturity of April 2015 paying 2.79% at a price of 100.046. - I selected that as I hate paying more than par for bonds. Is this correct or does the HSBC belong in the 20% allocation and something different in the 40%?

If I understood Clive correctly, then 20% would go towards your AIM cash, whatever you currently use in a typical AIM program. my choice for 20% cash is because 20/80 AIM behaves much like 100% stock based on my testing.

The A+ corporate bond, HSBC bond and in my example also TIPs would all belong to the 40% allocation. Call this the enhanced bond.

That is not to say that you cannot hold the same bonds or bond funds in both locations, i.e. the 20% AIM cash or the 40% enhanced bond portion.

I am really intrigued by this method and it seems to me that it can beat a 100% stock with less risk.

I hope this helps.