A.I.M. Users Bulletin Board

[Conrad]

On Retirement AIM-Clive

<60% to 95% equities is a massive risk to take in retirement IMO Conrad.
Ben Graham advocated 50-50 stock/bonds.>

Clive, perhaps I was not quite clear on that. I did not mean stock/bond distribution but Equity - Cash Distribution at the Start-up of the AIM Machine. In previous discussions and 80% Equity position at the start was mentioned and under certain conditions I agree with that. For example if an equity is chosen and at the entry point is at a Dip Recovery that, depending on how secure I judged the stock I would not hesitate to allocate 60% to 95 % if the available money to equity and in that regards I have not any particular position on the distribution to stock and fund and/or bonds . . .I suspect now that what you mean by "bond's" is perhaps "cash" stashed away at high interest rate.

Should one step in at the Top of a Trading Range I would start with 60 % to 95 % Cash.

These starting points would then reflect a similar case as having started at the Midpoint of the Trading Range with a much lower equity position

If one steps in at a Dip at 90% equity then this reflects more or less and Optimised Parameter set that invest most of the cash towards the bottom allowing some leeway for dropping price to the bottom limit and still have a bit cash left . . .If one starts with $ 100000 the at the 95% Entry there is still $ 5000 left to go. Instead of using the 95 % a cautious investor would use say 60% equity at the bottom of the trading range.

If the equity collapses at that point then than is bad luck . . .but THAT is no different than starting at 50% at the Midpoint and then buying towards 0 Cash at Bottom and then the stock collapses. . The same bad luck.

I do understand the point of using 50% of the available capital locked-up in an high yield Money Account . . . If the stock crashes and does not recover one still has money to buy butter and bread . . However that does not only apply for a Retirement AIM. . . it applies to anyone that is a conservative investor.

My idea of a Retirement AIM is to start it at 60 or 65, and then, an investor that can set up a Retirement AIM is in any case covered in most cases with a basic Pension Plan already. Assuming that and NOT starting a Retirement AIM to accumulate Extra Value for using it at age 90 the idea is to start taking out money monthly on the average, so most of the "money" should be kept on the equity-side at the Midpoint, so the average earnings are optimised . . .using the general experience that equity has higher yield that a money account.

Any wisdom that can add to these basics of How I would structure the AIM into a predominantly Selling Mode rather that an Accumulation Mode is of course always welcome for an investor with an Retirement AIM like I have in mind.

With the rest of you mathematical analysis you present I have no bone to pick on. . .it is your bone J . . It goes too deep for me to grasp it for now. . .Perhaps the essence of what you mean with the math could possibly improve the Vortex Retirement AIM Concept I have outlined. . . and that is essentially creating an AIM Equity Algorithm that predominantly sells equity periodically. . .(that need not be regularly on a monthly basis, just on the average). . . and less frequent buys new equity at price dips to capture extra yield at those opportunities by “beefing up” the equity base so that the average yield is optimised for the intended retirement period.