RE: More Twinvest
Say someone inherits $1.5M, is content to drawdown $500K of that over the subsequent 16 years, would rather not invest into stocks at the present time at relatively low yields, low inflation (high prices) and would rather time/cost average in over the 16 years.
$500K set aside for the drawdown over 16 years, $2600/month, and where if that 'cash' paces inflation so the $2600/month income also rises with inflation. Money ($1M) destined to be added to stocks is also deposited/invested into a inflation pacing cash deposit/account, and they set their TWINVEST to add £5200 to stocks each month (which over 16 years = $1M).
Discounting the drawdown $500K amount, that's $1M of cash that will be added to stock on a regular monthly time/cost averaging into stocks, for/over 16 years.
If the stock gains achieve a 4% annualised real rate of return, then at the end of the 16 years they'll have a all stock position of inflation adjusted value comparable to the combined $1.5M start date amount. They started with 0/100 stock/bond, ended with 100/0 stock/bond, so over the 16 years averaged 50/50 stock/bond overall stock/bond (ignoring the bonds that were being held for drawdown/spending).
That's without any benefit that Twinvest might add through its relative valuation based adding (or not) into stock each month.
Sequence of return risk is shifted so as to be zero at the front end, full head on at the tail end. If anything front end has positive sequence of returns 'benefit', in that if stocks halved the week after having started, then there's the option to forego using Twinvest and lump into stocks heavily after such share price declines.
That twinvest would have to be adapted to account for inflationary increases in the monthly amount being added, but that's easily resolved by just adapting Twinvest to flag percentages of stock and cash each month instead of hard capital values. And as Tom indicated, its best to stop/restart Twinvest after the share price had doubled (restart with a new Twinvest CODE).
Whether that might be better or worse than had they 50/50 AIM'd the $1M constantly instead ??? Fundamentally it would likely be a case of the particular sequence of returns seen over those years. Which often equates to relative valuations at both the start and end dates. If you opine that valuations are high at the start date then Twinvest could prove to be the better, if valuations were low then something like AIM-HI would likely be the better. If you're indifferent then classic AIM (50/50) is the middle road choice.
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