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Author: TchrP Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75859  
Subject: Re: Foolish 4 and DCA Date: 5/10/1998 10:18 PM
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>> Is it possible to dollar cost average using the FF without establishing multiple FF portfolios, or is this even desirable? I'm so used to saving on a monthly basis, you see.
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I'm not sure that this is necessarily a question about retirement investing (although I hold a Foolish Four portfolio in an IRA myself), and you might want to ask the same question on the Foolish Four/Dow Dividend board.

The FF and other Dow Dividend models that have been most extensively tested all entail lump-sum investments at the beginning of each holding period, so the tested methods would appear to be incompatible with DCA. To make it more complicated, the FF strategy always requires buying the *then* current FF, which would change from month to month, so you could easily end up holding not four stocks, but two to four dozen, with a variety of different anniversary dates.

This isn't to say that monthly investing isn't a good idea, though. Some people who want to combine a Dow Dividend portfolio with monthly investing let the monthly additions accumulate in either a money-market fund or an index fund until the anniversary date, or until there is enough to start a second portfolio.

Another way is to use a "Dozens" strategy, which involves buying one stock per month, but typically these would be four FF stocks (one per quarter, maybe) and eight other growth stocks, so it's not necessarily a pure FF play.

Yet another way - not possible in an IRA, though - is to anticipate your monthly investments by buying some of the shares on margin and then letting the monthly additions pay off the margin loan. I'm personally averse to buying on margin, except as a means of easing the settlements of trades, and it's not allowed in an IRA at all.
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