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Retirement & Benefits

Bucket Strategy

Also called: bucketing, time segmentation, cash bucket

The bucket strategy splits retirement savings by time horizon: cash for the next couple of years, bonds for the medium term, equities for the long term. Mathematically it's close to a plain asset allocation with rebalancing. Its real contribution is behavioural — knowing two years of spending sits in cash makes it psychologically possible to leave the equity bucket alone through a crash, which is exactly when selling does permanent damage.

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