I did a simple test, using these 2 approaches to STI index investing and want to see which one will fare better when back dated 20 years. At such, the investor would have go through AFC, Sars + Gulf war and the GFC.
To do this test, I make a lot of assumptions, for academic purposes, investors from either 1 approach could well do better or worse if some of the assumptions do not hold true.
Assume:
1) Investor A and B both start with $5000 and have $1000 fresh funds to invest every year.
Investor A:
Investor A stay fully vested and invest annually. For every year, I use roughly the mid point of the STI for the year to determine his entry point, someone with luck or better TA skills might have an entry point lower than the one I used.
Investor A invest fully when he start ......