RE: Dividends
Depends upon your objective jaiml
For instance one of my AIM's is buy and hold with 10% 'discretionary' and where 90% of the stock (index fund) is bought on a buy and hold basis, and AIM is allocated 20% (but only has 10% of the 'portfolio' total value). No cash is held at all (initial AIM settings 50% cash reserve).
When AIM indicates to buy $1000 more stock, sell $1000 of 1x and buy $1000 of 2x leveraged. When AIM indicates sell $500 then sell $500 of 2x and buy $500 of 1x. Pulling a Vealie rather than selling any 1x (so always at least 100% stock, but can expand up to 110% - typically when prices are down (AIM is buying)).
As a total return investment, dividends are just redeployed to buy more stock as soon as the dividend is received (once a year in that particular funds case).
When dividends are reinvested you just update the number of shares held (add on to the existing number of shares the additional number of shares bought using the dividend), nothing else. Typically the share price falls by the dividend amount, so adding the new shares just relifts the total stock value back to where it was pre-dividend (all else being equal).
Regards.
Clive.
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