Linney
Recycles dryer sheets
- Joined
- Nov 24, 2006
- Messages
- 321
Interesting, I use VYM as a stock not in bucket #2.
Good catch. Turns out I did the same thing -- I own VYM and I placed it in Bucket #3. I did leave Wellesley in Bucket #2 as I thought that was appropriate.
Here is how I decided to organize the buckets in my spreadsheet:
Bucket 1: 2-3 years spending. Cash, MM, Short-term CDs, Short-term bonds, I-bonds > 5 years old.
Bucket 2: 7-8 years spending. Intermediate & Total Bond, Longer-term CDs, Income funds (Wellesday), Rest of I-bonds
Bucket 3: Everything else
Other people's investment portfolios will look different and they would have to decide the placement for themselves. My ST Bonds are mostly treasury so they went into bucket 1. The I-bonds could have gone in either bucket 1 or 2 due to their nature (never lose value) so splitting them out by age is a bit arbitrary.
Like other posters I am using the bucket method to create another view of my portfolio, I am not using it as my primary method of managing it. I do like how it defines MIN and MAX for buckets 1 and 2 and that could be very useful for rebalancing in a severe downturn. I think it would be easier to sell bonds to buy stocks at dow 15,000 as long as I kept the MIN value intact.