Thoughts on the three bucket strategy.

Steven Barrett said:

Back to the OP, it is basic planning

1. Cash account for cashflow purposes
2. Investment account for medium term expenses. This can be anything from paying for education expenses or anything other expense you may have before retirement
3. Pension for long term wealth
4. Use the investment account in point 2. for other excess cash

Some people need to segment money for different needs., like keeping money for children's education separate to the excess cash investment account. There is no need to do this but if it makes you feel more comfortable with your finances, then go for it, it's not the end of the world. Having two accounts instead of one isn't the end of the world. It's the people who have none that is the issue.

All investment accounts should be equity based primarily. This is where your growth is going to come from. Add in bonds to reduce volatility as per your tolerance.


Steven
www.bluewaterfp.ie

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theObserver said:

It's how accumulating ETFs also work. You gain through the fund compounded price growth without paying the tax a dividend would trigger (until you sell of course).

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Deauville said:

Steven, I had my pension blinkers on and wandered off topic. Which was general bucket strategy and financial management.
Apologies to OP, theObserver.

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Deauville said:

Here’s the title of the paper I referred to. A search on google should bring it up.

The Bucket Approach for Retirement: A Suboptimal Behavioral Trick?

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nest egg said:

Thanks for posting Deauville. I have toyed with the idea of a two-bucket approach when thinking about what I do come draw down. The paper you've referenced however says you'll be better off if you avoid a bucket approach, and I can see the logic in its arguments. You're not making my life easier!
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Flybytheseat said:

Thanks - managed to find the Fund Manager Charge for the Prisma funds (0.4%) so presumably this is the FMC for all the funds without additional AMC called out on their list.

Given that execution only brokers charge 0.15% to .25% pa (depending on broker and ARF value) I should hopefully be able to source a Zurich ARF with AMC/TER of 0.65%-0.7% which sounds reasonable.

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theObserver said:

Any idea of the tax implicatations of investing through a Zurich product instead of eg via an ETF?

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