Replies to post #39957 on A.I.M. Users Bulletin Board (AIMUSERS)

[lostcowboy]

Constant Dollar Plan, Dollar cost averaging, AIM, Value Averaging, , Synchrovest.

Practical Formulas for Successful Investing by Lucile Tomlinson

Robert Lichello, Super Power Investing and How to Make $1,000,000 in the Stock Market Automatically

Value Averaging: The Safe and Easy Strategy for Higher Investment Returns
Michael E. Edleson, William J. Bernstein (Foreword by)

All these books are worth reading! Lucile Tomlinson has some interesting comments about both the Constant Dollar Plan and Dollar cost averaging.

Robert Lichello, in his Two books appears to have addressed theses comments with his simple formula's.

Mr. Edleson, in his book talks about his concerns with Dollar cost averaging. He talks about how it does not take into account Inflation or Growth of the stock market. He addresses this in his chapter on growth DCA. In his chapter on Value Averaging he combines his ideals on growth DCA with the Constant Dollar Plan, such that instead of a constant dollar amount, you use a changing dollar amount as a target that you buy or sell shares to meet.

It's my thinking that these different ideals could be combined into a better formula. Not sure how as of yet.

[ls7550]

Hi LC

Mr. Lichello's instructions on adding new money was to add half of the new money to stocks fund and half to cash fund, and add half to Portfolio Control. A better ideal on adding new money is, determine the ratio of your stock fund to your cash fund. the new money would be added with the same ratio. This should totally prevent the AIM Formula from getting upset

Some time back when thinking about the exact same I ended up recording - see the "AIM" tag on http://jfholdings.co.uk

Adding or withdrawing funds : For lump sums, add (or take) proportional amounts to (from) stocks and to (from) cash. Increase (reduce) PC by the proportional amount of stock value added (removed). i.e. if PC=12500, SV=15000, Cash=5000 and 6000 is being withdrawn, take (6000 x ( 15000 / ( 15000 + 5000 ) ) ) = 4500 from stock and the rest (6000 - 4500 = 1500) from cash and adjust PC by a factor of the new stock value divided by the old stock value = 12500 x 10500 / 15000 = 8750. Adding/removal in proportion to current stock/cash weigtings keeps AIM the same in all matters other than the total amount of funds invested in the AIM and the number of shares held (which differs from Lichello's original advice of adding/removing in proportion to target weightings).

Regards.

Clive.

[Toofuzzy]

I would just save up enough to start a new Aim account, for diversification.

Toofuzzy