Hi All,
I'm still reading up on AIM and similar systems. Last week I stumbled upon Andrew Hallam's Millionaire Teacher ("The Nine Rules of Wealth You Should Have Learned at School"). Interesting stuff.
His method lets you invest in stock index funds and bond index funds and re-balance your account periodically (once a year or every month). If your stock value significantly exceeds the 60% set at the beginning, he'll have you sell stocks and invest the money back in bonds and vice versa. Much like AIM, you're buying low and selling high and your bond money acts the same way as your AIM cash stash does.
Hallam advises to invest your age in bonds (say 40% if your 40) and invest the other 60% in a local (30%) and global (30%) index fund for diversification.
By checking up on your investments monthly (or even annually), and re-balancing according to the previously set percentages, it tells you roughly when and how much to sell/buy, the same way as AIM does, but without SAFE, Portfolio Control etc.
What do you guys think about this method in relation to AIM? Could the two systems be merged? For instance:
- bond index funds instead of money funds
- local and global index funds instead of individual stocks or actively managed funds
- keep the AIM system in place to decide when and how much to trade
- let your percentage in bonds grow with 1% point every year
