Get Buckets

The importance of segmenting your investments by time

The Weekly Habit

Only 38% of last week’s trivia participants knew the average effective tax rate for $200k-$500k earners was 16.77%. An overwhelming majority guessed the highest option 26.13%.

What is the average annual S&P 500 return since 1950?

This is a trivia question with one correct answer

Login or Subscribe to participate in polls.

My Bucket Strategy

There is a specific timeline for every dollar you earn, save and invest. In finance talk, we rephrase this as the investment time horizon.

The Bucket Strategy is a common approach to separate your assets based on periods of time.

Bucket #1: Lifestyle

The home to day to day expenses.

This is for the monthly mortgage payment, rent, utilities, credit card bills, and any cash you expect to spend on a regular basis.

Bucket #2: Security

For any upcoming expenses within the next 2-4 years.

This is where you store the emergency fund, downpayment for the new home, wedding, or any one-off sizeable expense.

Bucket #3: Growth

Any dollar you don’t expect to use in the next 5+ years

This is where you store the investments for retirement or your kid’s college fund(s).

***Also, any additional cash leftover from Bucket #1 or #2. This is when access to a financial advisor makes a huge difference.***

The Data

Trivia Answer: 11.2% avg. annual return

Source: Bloomberg, FactSet, Federal Reserve, Robert Shiller, Strategas/Ibbotson, J.P. Morgan Asset Management.

All of my former J.P. Morgan colleagues are saying to themselves “bUt pAsT pErFoRmAnCe Is NoT iNdIcAtIvE Of FuTuRe ReSuLtS.”

That’s true, but the data suggests that the stock market can return double digits if you STAY INVESTED for the long term.

Dive Deeper

Add intention behind each dollar. Find it’s bucket and maximize your growth potential. It’s about time in the market vs. timing the market.

My Key Takeaway

  1. Set up Bucket #1 for success

  2. Calculate what you need for Bucket #2 and fill it

  3. Put everything else into Bucket #3 and let it grow!

Level up, customize, and maximize your buckets through a financial advisor.

Don’t have a financial advisor? Find yours at Habits!

Thanks for reading, Habits fam. See you back here next week for more.


Got feedback? Hit reply and tell me what you think…I’m always looking to level up.