Chapter 11
Cash Combined in One Account
When you open your stockbroker account, you’ll probably start with more than one stock and hopefully 10 stocks – the ideal number. When you start the AIM system, you’ll have a separate spreadsheet for each stock and a separate cash account for each stock on the spreadsheet.
However, you really have ONE Money Market Account with one balance. You started with 10 stocks and $15,000; then you would have one money market account with your broker with a balance of $5,000 assuming all 10 investments use the ratio of 2/3 stocks and 1/3 cash ratio.
Now look at the spreadsheet showing the 10 cash balances in the cash total in Chapter 11 of your free Adobe Acrobat book. Now you see what I was talking about in Chapter 2, when you had to "borrow" money to buy more Adobe. You will really be borrowing from the other stocks in your money market account.
I recommend you set up a summary cash sheet like this for yourself. You could also put in a column showing PORTFOLIO VALUE. Then you could quickly decide when you're cash balance exceeds 33% and use the extra money to buy additional stock.
The cash balances will not be the same as the cash figures in the Chapter 15 spreadsheets. The balances shown here reflect the net cash amount remaining. For example, if the cash balance on the spreadsheet was $5,000 but the stock "borrowed” $4,000 than the cash summary which show $1,000. If the stock didn't borrow cash then the numbers of the same. Here I'm trying to show the actual cash remaining in your money market account with your broker.
