AIM investing has two special features:
Put half your money into stocks or long-term options (LEAPS).
Put the other half in cash.
This cash does more than serve as a hedge against market losses and a source of emergency funds – two very smart and attractive features! It also serves as a ready source of capital when your investment drops to a lower price.
(Buying low and selling high is the secret to successful investing, and the AIM system has refined this into a science.)
Although I have been using AIM myself for over 30 years, in today’s economy we have a problem: the cash will just sit in your stock broker’s Money Market Fund earning usually less than 1% a year.
There is an easy way to earn a higher interest rate by taking some of that cash out of the Money Market and investing it in high yield ETFs or closed-end funds.
Here’s a quick example: one of my investing clients started with $63,000. That means $31,500 in LEAPS and $31,500 in cash.
Rather than just let the cash sit in the Money Market account earning less than 1%, he decided to invest some of his cash in $AGNC.
This stock pays a 10% annual dividend rate.
And it pays it monthly!
He bought 1,000 shares. Each share pays an $0.18 dividend monthly. Now he is earning $180 a month in dividends since he bought $AGNC.
Do you know of any bank that will pay you $180 a month to keep your cash with them? I sure don’t.
Disclaimer: No guarantee can be made that this dividend or any dividend won’t go lower or stop – do due diligence on any high yield you are considering to put your cash into.
Here is a list of 25 closed-end funds and ETFs that pay monthly dividends. Do your research and see if you like any of these as a place to put some of your cash. Of course, if you need the money to make a buy for AIM you will have to sell some of the shares of the high yield to have the cash to buy more stock or LEAPS).
For subscribers of my monthly newsletter, they’ve learned exactly how I apply this strategy and still follow the AIM strategy of keeping 50% of my investments in cash. (They can also reply to me directly to ask me questions about how to get started with AIM.)
Here are the symbols for monthly dividend payers I have found – I do not specially recommend any one of these. They are provided as an educational tool to help you find the one that is right for you:
Want the fastest way to learn what you need to get started with the Automated Investing Method (AIM)? I compressed my 30 years of knowledge and experience with AIM investing into a book that takes less than an hour to read. You can get it here.
Thanks for reading this article. I have enjoyed writing it for you.
The author of this article is not an investment adviser and gives only his personal view and opinion, never making any investment advice or recommendation to buy or sell specific securities. Investors in financial assets must do so at their own responsibility and with due caution as they involve a significant degree of risk. Before investing in financial assets, investors should do their own research and consult a professional investment adviser.