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Investing/Strategies / Retirement Investing
|Subject: Re: IRA and BTD investing||Date: 6/8/1997 10:03 AM|
|Author: TMFpixy||Number: 54 of 77575|
Greetings, LonnyR, and welcome.
<<I'd like to pose a little question for all of you knowledgeable Fool's out there. Let's say I want to put the UV2 (BTD approach) to work for me in an IRA. I start with $2,000 and put $1,000 each in, say, T and MO. That's easy enough. The tricky part is what I do with next years contribution and the stock rotation. Let's say I'm stuck with T in the #1 spot and now IP is back to #2 and MO is at 5 or 6. I sell my stake in MO for $1,500 and hold my stake in T at $1,000. I contribute my $2,000 for this ye
ar. Do I add it to the $1,500 from the MO sale to make a total of $3,500 and then split the $3,500 into a $1,750 stake in IP and an additional $1,750 into T? This makes my stake in T $2,750 compared to $1,750 in IP. Is this the proper (most advantageous) way to work this? Any other suggestions or comments would be very much appreciated.>>
As for me, I'd look at the total market value of the account after I had made my deposit in the second year. Let's say your stake in T that year has a market value of $1,300. You're now adding $2,000 in deposits and $1,500 in sales receipts, so the total account is now is $1,300 + $2,000 + $1,500, or $4,800. I would add $1,100 to my T holdings, and buy $2,400 in IP, thus having $2,400 in both T and IP for year two. You've rebalanced the portfolio as per the methodology and are now set for another year, when you do it all over again based on the market value at that point in time..
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