A.I.M. Users Bulletin Board

[ls7550]

The original AIM form, 50% initial cash etc. was devised with fear/pain utmost in mind. During the 1970's many saw much if not all of their lifetime savings/investments lost in just a few years, as did many of those that endured the 1930's Wall Street crash. Decades later Lichello revised AIM with missed opportunity in mind ... how much more might have been accumulated had one not been so conservative across a great period for stocks, but where that in part over-looked/forgot the pain/fear cases of 1930's/1970's history. Standard/original AIM works, and works well. Yes its a cash-cow, regularly throws off more cash and lowers rewards, however the rewards can still be reasonable enough, just not as much as if you'd invested more aggressively across a good/great era. For those that have already established a sizable pot and have more regard for protection rather than reward standard AIM is one of the safest choices around. Withdrawing 8%/year from the cash pot and likely you'll see the portfolio value maintain its nominal value, but lose out to inflation, save some of that 8% withdrawal, perhaps half (spend 4%, save 4%) and that cash account + interest will build up over the years. Basically you'll broadly see declining number of shares being held (AIM is inclined to signal more sell trades than buy trades), AIM broadly maintaining its original nominal value, have covered spending and have accumulated a cash deposit account that after perhaps 25 years might compare in value to the original inflation adjusted total investment. Likely a lot less total return than had you gone all-in on stocks and seen good rewards, but importantly a lot more than if a repeat of the 1930's/1970's type cases were endured (that may present once in every 50 years or so, so a dice roll as to if for your own particular investment lifetime whether you live through such a case or not).

A more assured outcome of perhaps spending 4%/year, leaving a legacy for heirs perhaps comparable to the original inflation adjusted start date value, for some is better than maybe leaving a legacy of multiples of the inflation adjusted original portfolio value but where in some cases after just a few years your portfolio had evaporated and your Sunday family feast days had been replaced with servings from tins of dog food. Fundamentally a choice between whether you'll more likely have a reasonable multiple decades retirement, leave a modest legacy for heirs, or potentially leave a very generous legacy for heirs, but at the risk of a wipe-out. Often you'll find that legacies for heirs are largely irrelevant, they'll more often have already independently financially established themselves such that your risk taking was pointless.