2) Use the Bucket System
This method is good to have in place if the market takes a turn for the worse or another unforeseen event happens which makes accessing extra cash necessary. The Bucket System can utilize two or three different “buckets” (accounts, investments, etc.) First, calculate the amount of your basic monthly expenses. Then put enough liquid money to cover these expenses for several years into the first bucket, e.g., a safe investment like money market funds or a short-term CD. The second bucket is for pleasure or “extras” like travel. Put this chunk of money into a mix of short and intermediate-term bonds. Then put the rest of your money into a more profitable (but high risk) stock and bond mix with high growth returns. The idea is to use the profits from bucket number three to replenish the money you use from buckets one and two.
Click below to share this article.