A.I.M. Users Bulletin Board

[ls7550]

Hi LC

Mr. Lichello's instructions on adding new money was to add half of the new money to stocks fund and half to cash fund, and add half to Portfolio Control. A better ideal on adding new money is, determine the ratio of your stock fund to your cash fund. the new money would be added with the same ratio. This should totally prevent the AIM Formula from getting upset

Some time back when thinking about the exact same I ended up recording - see the "AIM" tag on http://jfholdings.co.uk

Adding or withdrawing funds : For lump sums, add (or take) proportional amounts to (from) stocks and to (from) cash. Increase (reduce) PC by the proportional amount of stock value added (removed). i.e. if PC=12500, SV=15000, Cash=5000 and 6000 is being withdrawn, take (6000 x ( 15000 / ( 15000 + 5000 ) ) ) = 4500 from stock and the rest (6000 - 4500 = 1500) from cash and adjust PC by a factor of the new stock value divided by the old stock value = 12500 x 10500 / 15000 = 8750. Adding/removal in proportion to current stock/cash weigtings keeps AIM the same in all matters other than the total amount of funds invested in the AIM and the number of shares held (which differs from Lichello's original advice of adding/removing in proportion to target weightings).

Regards.

Clive.