I follow the 3 Buckets strategy where I divide my net worth into 3
I have 2 years of annual expenditure in cash or near cash under Bucket 1. I have another 8 years of annual expenditure in Bucket 2
The rest of my net worth are in Bucket 3 with equal amount in stocks and real estate.
If you work out the numbers about slightly less than half of my net worth is in stocks.
- Bucket 1 – liquid assets eg cash. There serve as emergency funds so that I do not have to sell the volatile assets at the wrong time.
- Bucket 2 – safe assets where the principal is protected eg govt bonds. These serve as my floor net worth in case I lose all my risky assets
- Bucket 3 – risky and volatile assets eg stocks, properties. These are assets with the better returns but are more risky or volatile.
I have 2 years of annual expenditure in cash or near cash under Bucket 1. I have another 8 years of annual expenditure in Bucket 2
The rest of my net worth are in Bucket 3 with equal amount in stocks and real estate.
If you work out the numbers about slightly less than half of my net worth is in stocks.