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2 Buckets of Money You Probably Have and the One You are Missing Thumbnail

2 Buckets of Money You Probably Have and the One You are Missing

Investment Retirement Funding Insights

2 Buckets of money you most likely have, and the one you are missing.

I have designed hundreds of Financial Plans. Most of these plans are built around having different buckets of money. This article will explain those.

Unfortunately, most only have 2. They are missing the 3rd.

Flexibility. How much flexibility will you need in life?

Most people want/need a lot of flexibility because life doesn't happen the way we planned it. (No, I'm not talking about negative things, although they can also play a huge part!) 

The reasons most don't have flexibility?

  • Decisions are made by default
  • Advice from someone who doesn't know your situation
  • You live above your means
  • You don't know what you really want

The good news is if you set yourself up with these 3 buckets, it can create the flexibility and a higher likelihood of success.

Bucket 1: 

This is your checking and savings accounts. It's your emergency fund.

We all have heard and mostly understand the need of an emergency fund. The characteristics of this bucket are:

  • Accessibility to cash
  • Low risk
  • Taxable
  • Don't expect a high rate of return

Bucket 2: 

This is your retirement accounts. (401k's, IRA's, Roth)

These accounts are for your future self. When you no longer want to work or can't work. The characteristics of this bucket are:

  • Not as accessible due to taxes and penalties
  • Higher risk (typically)
  • Expectation of higher rate of return
  • Tax efficiencies (tax deferred, tax free)


You may have 10, 15, 30+ years left until you want to stop working or change your work lifestyle. What can happen over that amount of time where you may want extra dollars?

  • New home?
  • Children?
  • Sabbatical?
  • Start your own business?

The answer is a lot! So why don't we have a 3rd bucket that we can access if/when we want to?

The characteristics of this bucket are:

  • Access to cash
  • Medium risk
  • Expectation of rate return greater than savings account
  • Tax efficiencies

There are 2 types of accounts that would qualify based on those characteristics:

  1. Investment/Brokerage account (Taxable, but could use Long Term Capital Gains Tax)
  2. Permanent Life Insurance (Tax efficiencies, plus growth if designed appropriately)

This is 3rd bucket creates the flexibility most people desire. The issue? Most people put all of their money (for the most part) in retirement accounts. Have balance. Have money taxed differently. Have different risk exposures.

This creates leverage and flexibility.


Ryan Burklo is a Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). OSJ: 333 N. Indian Hill Blvd., Claremont, CA 91711. Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is a wholly-owned subsidiary of Guardian. Quantified Financial Partners is not an affiliate or subsidiary of PAS or Guardian. This material contains the current opinions of the author but not necessarily those of Guardian or its subsidiaries and such opinions are subject to change without notice. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.It is provided for informational and educational purposes only. The views and opinions expressed herein may not be those of Guardian Life Insurance Company of America (Guardian) or any of its subsidiaries or affiliates. Guardian does not verify and does not guarantee the accuracy or completeness of the information or opinions presented herein. AR Insurance License #15319412CA Insurance License #0K24924 #2022-136562 Exp 04/2024