Investing Doesn’t Have to Be Hard: The Bucket System Simplified 🪣

Investing Doesn’t Have to Be Complicated

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Investing doesn’t have to be complicated or intimidating. One of the simplest and most effective strategies for building wealth is to divide your investment capital over time into “buckets” based on timeframes and goals. Whether you’re looking at decades-long growth or short-term opportunities, understanding how to allocate your capital can be the key to achieving financial success.

Even if you’re starting with just a small amount of capital, building investing buckets can set you on the path to financial freedom.

What Are Investing Buckets?

Think of investing buckets as compartments where you place your investing capital based on how soon you’ll need it and how much risk you’re willing to take. Each bucket represents a timeframe:

1. Long-term: Investments held for 5-20+ years.

2. Medium-term: Investments lasting 1-5 years.

3. Short-term: Investments aimed at quick gains over days or weeks.

The beauty of this system is its flexibility—you can balance growth, risk, and liquidity to fit your personal goals. For example, some capital might grow steadily in a retirement fund or college fund, while another portion is used to capture short-term opportunities in the financial market and used for everyday cash flow.

A structured investment bucket system showing allocations for different financial goals and timeframes.

Long-Term Investments: Growing Your Wealth Slowly

Long-term investments are your safety net for the future. These are assets you hold onto for years or decades, allowing them to grow with high volatility through compounding. Popular options include:

• Real Estate: Owning property can generate passive income and increase in value over time.

• Farmland: A stable, low-volatility asset with consistent returns.

• Stock Indices: Broad market indices like the S&P 500, which historically averages a 10% annual return.

• Precious Metals: Gold and silver are often seen as safe havens during economic uncertainty, making them valuable additions to a long-term portfolio.

• Crypto Assets: Bitcoin and Ethereum have become increasingly popular for long-term holding.

• Angel Investing: Providing capital to early-stage businesses in exchange for equity, now accessible to retail investors with entries as low as $5,000.

A diagram for long term investment bucket system showing allocations for different financial assets.

Current Opportunities:

Today, we are extremely lucky to have access to all these assets through simple financial contracts and low starting capital. For example:

• Many funds now let you invest in a single home or farm with fees to manage the property at very reasonable rates, starting investing capital with as little as $1,000.

• Almost any market is either already or will soon be represented by an ETF.

• Even seed investing, traditionally reserved for the wealthy, is now accessible to retail investors.

• Systematic Investing: Because all the above assets are represented by financial instruments, they can all be invested in using very simple systematic long-term momentum rules. These rules help identify assets trending upward, keeping you on the right side of volatility and avoiding big drawdowns.

Medium-Term Investments: Riding Momentum

Medium-term investments are all about striking a balance between risk and reward. By holding assets with monthly intervals, you can take advantage of market trends while minimizing exposure to volatility.

One strategy to consider is momentum investing, where you buy assets that are already performing well. For example, Dual Momentum by Gary Antonacci has demonstrated highly respectable risk-adjusted returns. Sector rotation, a favorite on Wall Street, involves shifting investments among different economic sectors on a monthly basis to extract performance each year.

For instance, you might rotate from technology to healthcare stocks when market conditions favor one sector over the other.

Why Medium-Term Strategies Work:

• They capitalize on medium trends while they’re hot.

• They allow for active management without requiring constant attention.

Want to get started? Check out our TAA Portfolios, which provide monthly signals tailored to medium-term investors.

A flowchart for Gary Antonacci dual momentum trading system, showcasing the logic for implementing the trading strategy.

Short-Term Investments: Capturing Quick Gains

Short-term strategies are for those looking to profit within days or weeks. This bucket often includes:

• Day Trading: Buying and selling stocks or assets within a single day.

• Swing Trading: Holding positions for a few days to weeks.

• Options Trading: High-risk, high-reward opportunities.

Short-term trading requires a solid understanding of how to build robust strategies, discipline in managing a portfolio, adapting to new market environments, and sticking to system rules. Without a systematic approach, most traders struggle to achieve consistent success.

The Benefits of Short-Term Strategies:

The other side of short-term trading is its potential. With a portfolio of strategies and a higher number of trades, you can recover from drawdowns quickly and generate consistent profits that add up over time or can be used as cashflow for daily needs. Most of my YouTube videos on the StatOasis channel focus on short-term strategies to help traders develop a disciplined, profitable approach.

Why Diversification Matters

At the heart of investing buckets is diversification. This means spreading your capital across different strategy styles and timeframes to reduce risk. For example:

• Pair stable investments like farmland with high-risk, high-reward assets like crypto.

• Balance long-term growth with short-term flexibility.

Example of a Diversified Portfolio:

A portfolio might include:

• 25% in long-term investments like real estate or farmland.

• 35% in medium-term momentum strategies.

• 40% in short-term trading strategies.

A bar chart showcasing an example of diversified portfolio allocations.

You can adjust these allocations as your financial goals and market conditions evolve, ensuring your portfolio always reflects your priorities. The beauty of the system allows you to easily adapt it to fit you. Each bucket can be as big or small as you like. This will depend on your time availability, knowledge, and capital.

Making Investing Easy with TAA Portfolios

I’m often asked by family and friends to forecast prices for assets like real estate, oil, gold, and indices. Many beginners and busy professionals feel overwhelmed by the complexity of building strategies, analyzing data, and managing risk. That’s where Tactical Asset Allocation (TAA) Portfolios come in.

Instead of complicating things with predictions, I developed a simple solution for everyday people: TAA Portfolios. With these portfolios, all the research is done for you. Each month, you receive a trading signal for over 23 portfolios that can be executed in less than 30 minutes. It’s the ultimate hands-off way to achieve exceptional, risk-adjusted returns.

Ready to simplify your investing? Join the movement.

"TAA Portfolios are designed for everyday people who want exceptional returns without the headache of managing complex strategies. All you need is 30 minutes a month to take control of your financial future." – Casey, Founder of StatOasis

 Conclusion: Building Your Buckets, Building Your Future

Recently, a student asked me, "Why go through the hassle of active trading when the Nasdaq Big 5 medium-term portfolio is producing high returns north of 60% per year?" My answer was simple: you don’t know when this ride will end. Right now, we’re in a favorable market environment for this portfolio, but history has shown that no strategy works forever. That’s why it’s crucial to diversify and have other strategies in place for when momentum falters.

Investing buckets offer a simple, effective way to grow your wealth while balancing risk and reward. By dividing your portfolio into long-term, medium-term, and short-term categories, you can prepare for the future, capitalize on trends, and seize immediate opportunities.

The best time to start was yesterday. The second best time is today—don’t let another opportunity pass you by. And for medium-term strategies that are easy to follow and proven to work, join our TAA Portfolios. Your financial future is waiting.

Q&A: Understanding the Investment Bucket Strategy

1. What is the bucket strategy in financial future planning?

The bucket strategy involves dividing your investment capital into separate "buckets," each designated for different timeframes and financial goals:

• Short-Term Bucket: Holds cash or cash-equivalent assets to cover immediate expenses and unexpected costs.

• Intermediate-Term Bucket: Includes investments like bonds or dividend-paying stocks, intended for expenses within the next 3-10 years.

• Long-Term Bucket: Invested in growth-oriented assets like stocks, real estate, or crypto for appreciation over a decade or more.

This approach helps balance risk, ensure liquidity, and grow wealth over time.

2. How do I determine how much to allocate to each bucket?

Allocating funds to each bucket depends on your financial goals, risk tolerance, and when you’ll need the money. Here’s a simple method:

• Calculate your short-term needs: How much cash do you need to cover expenses for the next 1-2 years?

• Assess your medium-term financial goals: Do you need money for a home purchase, travel, or education in the next 3-10 years?

• Think long-term: Money you don’t need soon can be invested in high-growth assets for long-term wealth building.

Revisiting your allocations regularly ensures they match your changing financial situation.

3. Can the bucket strategy help protect my investments during market downturns?

Yes, one of the biggest benefits of the bucket strategy is reducing risk during volatile markets:

• Your short-term bucket acts as a safety net, allowing you to cover expenses without selling investments during a downturn.

• Your intermediate-term bucket provides stability, holding assets that offer moderate returns without extreme risk.

• Your long-term bucket focuses on growth, giving your investments time to recover from market fluctuations.

This structure keeps your financial plan on track even when markets are unpredictable.

4. How often should I rebalance my investment buckets?

You should review and adjust your buckets at least once a year or whenever you experience major life changes, such as:

• A significant increase or decrease in income

• A change in financial goals (e.g., buying a home, starting a business)

• A shift in market conditions that affects your investments

Regular rebalancing ensures your portfolio stays aligned with your financial objectives.

5. Is the bucket strategy suitable for everyone?

Yes, the bucket strategy can work for anyone who wants to manage their money in a structured way, whether you're just starting to invest or already growing your wealth.

• If you prefer a hands-off approach, this strategy helps create a simple, organized plan.

• If you enjoy active investing, you can tailor your buckets to match your risk tolerance and time horizon.

• If you run a business or have variable income, a well-structured bucket system can help maintain cash flow while growing long-term wealth.

6. How does inflation impact the bucket strategy?

Inflation reduces purchasing power, so it’s important to balance safety with growth:

• Short-Term Bucket: Holding too much cash can lose value over time due to inflation.

• Intermediate and Long-Term Buckets: Investing in assets that grow faster than inflation (like stocks, real estate, or commodities) helps preserve purchasing power.

The key is to find the right balance between stability and long-term financial growth.