Rich_by_the_Bay
Moderator Emeritus
I'm getting a little less impressed with Lucia's 3-bucket concept, though I found it very helpful in my planning process.
As I read and learned more about it and gauged the reaction here and elsewhere, there is too much ambiguity about just how to maneuver money into and out of his intermediate bucket, even by Ray himself. In fact, it was his radio show podcasts that soured me a bit on the whole idea. As a grabber, he says 3 buckets, empty 1, empty 2, and 14 years later use 3 to replenish. But scratch the surface and you hear about 3A, 3B, rebalancing periodically from 3 to 2, 2 to 3, and 2 to 1.
I think I am going to stick with Armstrong's 2-bucket approach. That is, 7 years expenses in ultraconservative cash and short term bondss; forget trying to squeeze optimal bond returns in return for more volatility with this money, just keep it basic. Invest the rest in diversified equities and rebalance the allocation ever 1-2 years but only when the market (or at least a sector or two) is up, wait it out if not.
In the 4% SWR world, this means a 72:28% allocation -- higher than conventional wisdom. But 7 years of sure-thing money will probably let me sleep just fine. Maybe stretch it out with intermediates if things go very well a few years down the road.
As added incentive, FIRECalc seems to like higher stock:bond allocations -- at least 72:28.
As I read and learned more about it and gauged the reaction here and elsewhere, there is too much ambiguity about just how to maneuver money into and out of his intermediate bucket, even by Ray himself. In fact, it was his radio show podcasts that soured me a bit on the whole idea. As a grabber, he says 3 buckets, empty 1, empty 2, and 14 years later use 3 to replenish. But scratch the surface and you hear about 3A, 3B, rebalancing periodically from 3 to 2, 2 to 3, and 2 to 1.
I think I am going to stick with Armstrong's 2-bucket approach. That is, 7 years expenses in ultraconservative cash and short term bondss; forget trying to squeeze optimal bond returns in return for more volatility with this money, just keep it basic. Invest the rest in diversified equities and rebalance the allocation ever 1-2 years but only when the market (or at least a sector or two) is up, wait it out if not.
In the 4% SWR world, this means a 72:28% allocation -- higher than conventional wisdom. But 7 years of sure-thing money will probably let me sleep just fine. Maybe stretch it out with intermediates if things go very well a few years down the road.
As added incentive, FIRECalc seems to like higher stock:bond allocations -- at least 72:28.
