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Subject:  Beating the Dow w/Payroll Deductions Date:  2/11/1998  7:28 PM
Author:  Hillmp Number:  1737 of 88775

First, I've received interesting responses to the first couple of messages I posted in this folder, so thanks for the responses.

Now to the heart of the matter---I've narrowed my choice of investments for my 403(b)(7) retirement account (which only allows mutual funds) to two: an S&P 500 Index and a Dow 10 fund.

The Dow 10 accepts contributions on a rolling basis and every 10 weeks or so recalculates the 10 stocks. Example: Every two weeks for Jan-Mar 15th, my payroll deductions buy the 10 stocks as calculated on Jan1. These buys are grouped as Purchase #1. Then, between Mar16 and May31, my payroll deductions buy the 10 stocks as calculated on Mar16. These buys are grouped as Purchase #2. And so on throughout the year. Next year Purchase #1 plus payroll deductions for Jan1/99-March15/99 all buy the same 10 stocks. And so on for Purchases #2-5.

Do the advantages of this strategy i.e. being invested in a historically higher returning strategy (17% v 11%) outweigh the fact that I'm buying stocks at varying prices (the fluctuations within a given 10 week period) and therefore not following a true Dow 10 strategy.

My other thought is to invest the current year's payroll deductions in the S&P 500 index fund and then once a year on a given anniversary date, put that money into the Dow 10 fund.

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