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Old 08-12-2011, 07:37 AM   #21
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Join Date: Jun 2011
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Well, I did it and slept just fine.

Discovered Vanguard is open till 8 pm, so gave them a call and chatted a bit, then opened my account on line. Very simple, very straightforward. Will take till Tuesday till my funds are transferred from my bank, so not really an investor quite yet.

48% on Total Bond
26% Total Stock
13% International Stock
13% Small Cap

Also cash into the Money market fund so I can invest in my "Allegria" stock of choice as soon as the money is available.

Phase I is complete, thanks to many of you! Now, on to Phase II, how much and how often for the DCAing portion of this investment. I will, as suggested, get these amounts invested automatically at intervals.

More reading to do before I can go hit the couch as some here have suggested!

Thanks everyone and if you have any suggestions on DCAing or can pinpoint good posts or articles about it that would be nice, too!


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Old 08-12-2011, 08:00 AM   #22
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For your DCA, you might consider an approach called value averaging rather than DCA. It works like this, let say you want to invest $12000, a $1000 a month for 12 months. The first month you would invest $1000. If at the end of the month the $1000 was $950 as a result of market movements, you would invest $1050 (bringing your total balance to $2000). If at the end of the next month the balance was $2075, you would invest $925 (bringing your total balance to $3000). So on an so forth until the $12000 is fully invested.

What this approach does is invest more when the market is relatively lower and invest less when the market is relatively high (buy low). You have to fudge it a bit here and there but I used that approach to save for my kids education and was quite pleased with the result.

It is just a slightly better version of DCA, but does require a smidgen of additional work. Some folks would rather keep it simple and DCA a fixed amount each month. Both work fine, the important thing is that you are investing in your future.

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Old 08-12-2011, 08:09 AM   #23
Dryer sheet aficionado
Join Date: Jul 2011
Location: Reading, MA
Posts: 37
I'm a bit confused about Dollar Cost Averaging (DCA) in this situation. You're retired, so are you really planning to add new money to your VG investments each month? If so, then I assume the new money will come from your pension?

Regardless, the goal of new money coming into your VG account should be to maintain your asset allocation (AA). That means when stock prices are low, ALL of that month's new $$ goes to buy more stock. And when stock prices are high, all of the new $$ goes to buy more BONDS. This is especially true when the new $$ is a small fraction of the total already invested.

Anyhow, I think my point was: this is a variation (an improvement) on classic DCA: you buy stocks when their value is low, but you don't buy any stocks when their value is high...
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Old 08-12-2011, 03:32 PM   #24
Recycles dryer sheets
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Thanks pb4uski! I will think about that approach while figuring out how much how often as a basis. That could work very well, but as usual I always need time to digest new ideas. DCAing with value added? Does it have a proper name?

Thank you too, Wizard, of course the idea is to keep the AA more or less stable to the original AA, so may have to favour one fund over another according to market flucuations.

Thanks again,

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