**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.
How ironic: I would consider dividends as new cash.
It's more of how Automatic investor works. According to the book, when you add "new cash," you're supposed to split the difference according to whatever you have set up as the initial cash/security ratio. In other words, if I'm running classic AIM I'd put 50% into the cash reserve and the other 50% I'd buy more stock. Or 20/80 if using AIM-HI. But since, as I indicated in the previous post, that this might not be the best time to take on more stock, it can be counterproductive to do so, especially if you're saving each and every month or even weekly.
Dividends, under AI go directly to the cash reserve, without forcing a portion to be invested at that time, rather it will just hold it as cash until AIM says, "yep, time to buy again." Perhaps the terminology was a bit unclear. What I'm doing is keeping the regular week-to-week savings out of the AIM process until AIM wants to do another buy.
One could use a TERM or TWINvest to start future AIM programs with, yes, that's the idea. Once the AIM program is going, it will pretty much take care of itself after that. One could then start another TWIN or Termvest going and spawn another AIM program in year 3 and so on.
That works if you're doing each security holding by itself. Won't work so well if you're AIMing the whole portfolio.
Best,
AIMster
