Our Three Bucket Theory: A Process For Investing

Benjamin Haas |

When it comes to investing, emotions can run high, especially as we approach retirement age. That's why we believe in the three bucket theory, which can help you manage the risks that come with investing and provide peace of mind.

To begin, it's important to assess how much you need to save to supplement your other sources of income in retirement, whether that be from Social Security, pensions, real estate income, or part-time work. Once you have this number, you can divide your savings into three buckets: short term, medium term, and long term.

  • Short term bucket: This bucket should hold one to two years' worth of income that you need to supplement your other sources of income to cover your expenses.
  • Medium term bucket: This bucket should be filled with income-producing assets, or those that generate income for you. We suggest filling this bucket with three to seven years' worth of income.
  • Long term bucket: Regardless of your risk tolerance, we recommend investing for the long term (seven years or more). This bucket should be filled with assets that provide growth potential over time.

We recommend starting with a financial planning process to define your income needs, wants, and wishes, and then bucket your savings into specific periods of time with these different objectives.



Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor. Great Valley Advisor Group and Haas Financial Group are separate entities. This is not intended to be used as tax or legal advice. Please consult a tax or legal professional for specific information and advice. All content and information is for informational and educational purposes only. Tracking # T006056