INVESTMENTS  -  TIMETABLES
 
 

 


Setting Up an Investment Timetable

If you are more comfortable gradually investing your cash, you need to set up an investment timetable. This will allow you to take a disciplined approach to investing the money, so that you won't be swayed by changing market conditions. If you don't follow the timetable because you're concerned about market conditions, you risk keeping the money in cash too long. The following table shows a typical investment timetable over a period of 18 months. Note that the allocations in the column entitled "18 Months Hence" are your target allocations that are discussed in Chapter 10 of Your Money Matters. In this example, and it is only an illustration of how this is done, the target investment allocation is 70 percent stocks and 30 percent bonds. As the timetable also indicates, while 20 percent of the money is invested in stocks and stock funds immediately and 15 percent of the money invested in long-term bond funds immediately, the majority of the cash initially sits on the sidelines in either money market funds or short-term bond funds.

Within the first 12 months of the investment program, stock exposure is increased from 20 to 50 percent. And finally, 18 months hence, this illustration reflects the investor's target allocation. You may want to devise your gradual investment program over a shorter or longer period. The important thing is to follow your timetable once it is set up. Of course, if during the interim there is a major change in the investment markets, such as a major decline in stock prices or a sharp rise in interest rates, you may want to accelerate your investment program somewhat to take advantage of more favorable investment conditions.

Gradually investing a lot of cash or a financial windfall often makes a lot of sense, particularly when you think stock prices are unusually high and/or interest rates are temporarily low. Certainly, opportunities may be missed by following such a timetable, but on the other hand, costly mistakes may also be avoided.

Taking Your Time to Invest

Sample Timetable for Investing Cash or a Financial Windfall

                                                                                  Percentage Allocation
 

	Now	6 months hence	12 months hence	18 months hence
Stock & Stock Mutual Funds
Growth	5	5	10	15
Growth & Income	5	10	15	20
Small Company	5	10	10	15
International	5	10	15	20
Subtotal stock and stock mutual funds	20	35	50	70
Bond and Bond Mutual Funds
Corporate: Short-Intermediate Term	10	5	5	-
Corporate: Long-term	5	5	5	5
U.S. Government: Short/Intermediate Term	10	10	5	5
U.S. Government Long-Term	5	5	5	5
Municipal: Short/Intermediate	10	5	5	5
Municipal: Long-term	5	10	10	10
Subtotal bonds and bond funds	45	40	35	30
Money Market Funds	35	25	15
Total	100	100	100	100