Bucket #3: Understanding the “Risk Growth” Bucket

Bucket #3 is where time becomes your partner in wealth building.

If you missed our latest article covering the basics of Bucket #1 here and Bucket #2 here.

Bucket #1 is for your liquid cash so you can 1) handle emergencies (without credit cards or other loans) and 2) take advantage of opportunities when they arise.

And Bucket #2 is your “sleep well at night” money. It grows over time, is insulated from market swings, and is protected through contractual guarantees. This bucket should get larger as you get closer to retirement.

Today we turn to Bucket #3, the risk growth bucket.

Bucket #3 is where long-term wealth is built. It includes assets that rise and fall, sometimes sharply, but that also carry the potential for much higher long-term returns than anything in the first two buckets. With enough time and discipline, these assets can change a family’s financial trajectory.

NOTE: In your twenties and thirties, Bucket #3 often plays a larger role. As you near retirement, Bucket #2 takes the lead. Your buckets shift as your life shifts.

Just a few examples of safe growth assets include real estate, stocks, corporate bonds, commodities, venture capital, cryptocurrencies, collectibles, and even your own business.

These are all obviously risk assets. They come with no contractual guarantees for your investment principal, like Bucket #2. But they can handsomely reward those who stay focused, avoid emotional decisions, and let time do its work.

Of course, prudent risk is not something to fear. In fact, you cannot build long-term wealth without some exposure to this bucket.

In fact, a balanced plan needs all three buckets. Instant liquidity for peace. Safe money for guaranteed growth. And risk for higher long-term growth.

Next time, we’ll bring the full strategy together so you can see how each bucket supports the others. Stay tuned!

Blessings!

Related Resources

• Introducing the Three-Bucket Strategy: A Simple Way to Bring Clarity to Your Finances
• Bucket #1: Building Your Financial Foundation With Liquid Assets
• Bucket #2: Why Your Plan Needs “Safe Growth” Assets
• Five Levels of Financial Freedom

incoming searches: Bucket 3 risk growth, three bucket strategy risk growth

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