Replies to post #42721 on A.I.M. Users Bulletin Board (AIMUSERS)

[OldAIMGuy]

Hi Adam, Re: Indexing PC with ETFs..............

I think especially with income ETFs your method has merit. It occurred to me that the amount to index could be equal to the annual dividend percentage. So, if VNQ pays say 4.5%/Year, then index PC by 4.5%.

That should help to keep the AIM holding more fully invested over time. This technique should work well with high dividend and value oriented ETFs over time.

I use a fixed upper limit for cash on my income ETFs. For instance, I use a max of 15% for shorter maturity Treasury ETFs and up to 30% for junk bond ETFs. I use "vealies" and sales during rising tides to keep the cash close to the target level. However, even with such techniques, it's been difficult to get much activity on the buy side in a long time. I think adding a dividend percentage to the Portf. Control would aid in getting such investments back to higher Equity/Cash ratios.

Raising PC raises both the next buy and sell prices, so there would be greater likelihood of seeing more buying take place.

Thanks for bringing this up.