Q.
Tom, You must have been around for awhile as I see your name all over
the place associated with AIM investing. I am new to the AIM strategy
and see great opportunities with it. I have set up AIM for a group of
stocks I own and now want to setup my 401k mutual funds with it and my
childrens college education funds with it.
SO my first question is how do I properly setup AIM for my 401K. It
invests a % of salary every 2 weeks. The amount can be split among
several mutual funds which include Growth, Income, Bonds, etc.. I have a starting position in 2 funds. Each 2 week period is an additional investment in the funds.
Do I setup AIM with the two funds and establish a cash reserve in a Bond or asset protection fund? This would serve as the cash reserve.
The second question concerns my childrens funds. I am not adding to
these currently and want to set them up with AIM. They are in 2
agressive growth mutuals right now. Both has a small percentage of cash reserve in a MM.
Some advice would be helpful!
BTW: my stock AIM has netted profit already.. yee haw!
Thanks, Steve
A.
Hi Steve,
I've been keeping an AIM topic going for nearly 5 years now, first on Prodigy through their Money Talk Bulletin Boards and most recently on the web. I'm glad you could find reference to our pages easily. It looks like you are serious about getting up and running with AIM. I'll be happy to help in any way I can.
For your 401K, if your existing accounts are already sizable, I think I'd just start AIMing them right now. Instead of selling off some of your present position to raise cash, just set up AIM by making the Portfolio Control value 0.90 of today's stock fund value (assuming that it is profitable!). This will make the account start selling with just a small rise in price of the fund. Then you can build your cash reserve out of future profitable sales. If the market turns against you and asks you to buy before you've established a cash reserve, you can use your biweekly cash to supplement any buying AIM requests in the near term.
For the continuing contributions to the 401K, I'd suggest using Mr. Lichello's TWINVEST for that. I've used it and it works marvelously. After you've accumulated another $10,000 of value (cash and equity) in that new account, set it free with AIM as its guide and start another. Your idea of using some low risk asset protection plan as the Cash Reserve is a good one. You don't want to be in the position of having to sell a bond fund at a loss to buy more shares of your favorite fund at AIM's insistance!
Generally, you want to use mutual funds that stay nearly 100% invested all the time. These will have the greatest price volatility. I use FORBES magazine's annual mutual fund report (comes out in Aug. or Sept, check your local library) and look for funds that are rated A+ for bull markets and F for bear markets. Then I screen those for funds that still beat the S&P 500. These will work beautifully with AIM.
I think my advise for the kid's money is pretty much the same. If the accounts are already profitable, set Portfolio Control to 0.90 of the current value of the equity side of the account. Then AIM will start to build a suitable cash reserve right away. I would like to caution you based upon my own experience, however. When I first started using mutual funds, I let them sell too many shares and build too big a cash reserve. I'd cap the cash reserve at about 33% maximum and start doing vealies after that. You can read about vealies at the web site under the AIM FAQ section. This will maximize your growth with a diversified aggressive growth fund. Also read about the Split SAFE idea as well.
Please feel free to ask any further questions as time goes along. I built the web pages to assist others along the learning curve. Hope they help you as well.
Best regards, Tom in WI |
