The advantage of using buckets for short-, intermediate- and long-term goals is that you can keep clear and specific tabs on the risk-return profile of the types of investments you use to fund them. If you know you’ll need a certain amount of money within 12 months to meet a certain goal, you’re not likely to invest in stocks within that bucket, because stocks are susceptible to short-term volatility.
Posts Tagged ‘buckets’
Think Of Buckets, Not Budgets When Saving For Specific Goals
Thursday, June 28th, 2018Jumbles of Numbers
Monday, June 4th, 2018Without setting your life goals, saving and investing can seem like a bunch of disconnected facts and figures
For many investors, the process of monitoring progress to retirement can seem to swirl around a bunch of numbers: portfolio performance, market index returns and portfolio rebalancing percentages, to name a few.
These are important figures to keep in mind, but they miss a key critical element: how you go about defining and prioritizing your unique life goals, and then tracking your progress toward them. Here are five ways to make sure that the numbers don’t sidetrack you from what’s really important — living the personally enriching life you have imagined for yourself.
Start with the big picture. The way you view your long-term financial picture generally can be segmented into three goal “buckets:” your needs (think housing, health care), wants (hobbies, travel) and wishes (fishing boat, new outdoor kitchen). (more…)
