why would One want to use TWINVEST when One could make AIM 'deposits'? My copy of the AIM book describes how to handle funds added to/subtracted from an AIM account.
As Toofuzzy and Tom have already mentioned, it's an optimized delaying tactic to build up both the twin components of an invested posititon and a cash reserve. Fine and fair enough.
What should be noted, though is that in traditional AIM, the function of the system works as a closed-loop system. Lichello allows for the addition or subtraction of money as required, of course, but primarily done on a very infrequent basis, so as not to disturb the functioning of the algorithm.
Synchrovest and TWINVEST (and DCA, for that matter) are for people who are saving each month and wish to make continuous periodic investments. Synchro and TWIN optimize the how much do I allocate per interval question between cash and stock, with an eye to favor buying more at lower prices and less at higher.
But, say you're running an AIM program and you're also saving $200/month. If the price of the particular stock is falling, you're better off because you're doing what AIM would be doing anyway, though likely in much smaller "bites" and with greater frequency, greater tax lots being generated too. So the bottom line in this case is AIM will go along with you, though not really amused at having to share the driver's seat, so to speak.
On the other hand, if the price of the stock is rising toward where AIM is starting to think, "yeah, maybe we can keep the greedy, greedy," here you are acting greedy yourself by increasing your position! So instead of waiting for AIM's sell signal, you're forcing AIM to carry more load, at greater-and-greater cost, rather than optimizing toward an average lower cost per share!
So that's why Lichello doesn't want you to tamper with the AIM program too much - if you're going to be saving, play it closer to one of the vest programs instead.**
**A loophole I use - under Automatic Investor I count the savings as dividends rather than as new cash. This allows me to increase the cash reserve without changing the internal functioning of the AIM program. When AIM needs to make a buy, there's just more cash reserve available than there would be if I totally used the closed-loop process.
Best,
AIMster
