The Bucket Strategy is Flawed--Do this Instead

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The bucket strategy of retirement investing is flawed. In theory, it helps retirees avoid selling stocks in a down market. Yet the bucket strategy suffers from several problems. First, in a down market, one should be buying stocks, not just avoiding selling. Second, it's very difficult to know when to move money from one bucket to the next. Finally, it can lead to asset allocations contrary to the 4% rule.

Just pick an asset allocation (e.g., 60/40) and rebalance every year. Rebalancing causes us to sell high and buy low. And you can keep some of the bond allocation in cash to sleep better at night. Much easier to implement.

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4️⃣ Warren Buffett Portfolio: https://bit.ly/3pdI8mm

ABOUT ME

While still working as a trial attorney in the securities field, I started writing about personal finance and investing In 2007. In 2013 I started the Doughroller Money Podcast, which has been downloaded millions of times. Today I'm the Deputy Editor of Forbes Advisor, managing a growing team of editors and writers that produce content to help readers make the most of their money.

I'm also the author of Retire Before Mom and Dad--The Simple Numbers Behind a Lifetime of Financial Freedom (https://amzn.to/3by10EE)

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DISCLAIMER: I am not a financial adviser. These videos are for educational purposes only. Investing of any kind involves risk. Your investment and other financial decisions are solely your responsibility. It is imperative that you conduct your own research and seek professional advice as necessary. I am merely sharing my opinions.

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