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Subject:  Re: Investing Frequency Date:  10/21/2007  11:29 AM
Author:  yttire Number:  4459 of 5260

Personally, I am inclined to agree that the headache of keeping track of all the transactions is best kept to a minimum, so you should invest on a quarterly basis. I think that the extra amount you would earn by investing say, on a monthly schedule, would be minimal.

But lets analyze it for the sake of argument. Let suppose your real rate of return is 8%- probably higher than what you will get from the market, but a reasonable estimate. Now lets compare quarterly, monthly, and yearly.

If we examine this monthly, quarterly, and yearly then we find:

After 1 year:

monthly: 24867
quarterly: 24708
yearly: 24000

After 5 years:

monthly: 112056
quarterly: 111339
yearly: 108146

After ten years:

monthly: 360248
quarterly: 357940
yearly: 347677

So you can see that after ten years, you are down by about $2308 if you go quarterly instead of monthly. You are down $12,571 if you go yearly instead of monthly.

Comparing quarterly instead of monthly, you are out 0.006 of your capital, or less than 1% by changing strategies. I personally don't think this is worth it- you would be better off spending that time on paperwork researching new investments, which would increase your return far far more than a tenth of a percent a year.

However, it is a bit better to go quarterly than yearly, to the tune of 3% of your total asset base. Again, not a huge thing- you would be better off again with researching better investments. However, quarterly seems like a good strategy.
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