![]() When building your bucket strategy, make sure you understand something called the "sequence of returns risk." This is a phenomenon that involves the order and timing of poor investment returns and the timing and size of your withdrawals. By having other buckets to cover your near-term expenses, you hopefully don't need to worry about being pressured to sell some long-term investments from the third bucket in case of a market downturn because you won't need to tap into them for several more years. The idea behind putting certain types of assets into each bucket is that it allows you to put more aggressive assets in your long-term bucket with the risk tolerance to ride out market ups and downs. Depending on your level of risk tolerance, the second bucket could include what are usually seen as lower risks investments, such as a mix of bonds and income focused equities, and the third bucket could be focused on growth because it has the longest time horizon. That first bucket could include a mix of cash, a ladder of CDs, and money market funds. Liquidity and low risk are the hallmarks of bucket number one. ![]() You may wish to invest the different buckets in a mix of assets. Create a projection of your expenses during the next several years, factoring in inflation and any one-time events, such as paying for a child's wedding. To create the first bucket, calculate your budget for yearly living expenses and then add in extra cash for an emergency fund in case you encounter a surprise expense. Of course, this does nothing to guarantee that the investor will have enough for the retirement they envision. There can be a psychological benefit to the bucket approach because it can provide investors with more confidence, knowing they have certain assets and income sources set aside for their anticipated future expenses. One idea to consider is the "bucket approach," a drawdown strategy that involves holding three different buckets of money, or separate asset accounts, with each one covering a different segment of your retirement. Just as every retirement is different, withdrawal strategies don't come in a one-size-fits-all approach either. When it comes to withdrawal strategies, there are many choices beyond the traditional 4% rule. But retirement also may include making an important psychological adjustment as you shift from accumulating assets through earned income, investing, saving, etc., to spending that money in retirement. ![]() We all have our own visions and hopes for our retirement years, such as traveling the world or pursuing hobbies you never had time for. Environmental, Social and Governance (ESG) Investing.Bond Funds, Bond ETFs, and Preferred Securities.ADRs, Foreign Ordinaries & Canadian Stocks.Environmental, Social and Governance (ESG) ETFs.Environmental, Social and Governance (ESG) Mutual Funds.Benefits and Considerations of Mutual Funds.
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