Wall Street has done a great job of marketing us. So much so that they have convinced us that we should sell our Amazon stock to pay our cable bill. Warren Buffett once said, “If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes.” We take his advice to heart. We can’t be invested in the market for ten years if we are using that same bucket of money to create income. So, what do we do?

This brings us to our last point which is our “income bucket.” The worst year for the stock market in the last hundred years was a loss of over 43%. That’s an impactful loss for the portfolio. We can’t control what the markets are doing so we separate out our income bucket from our growth bucket.

The liquid bucket and income bucket are designed to meet our lifestyle needs in retirement. We use the income bucket to cover all of our income needs for ten years. We want this money to be some place that’s protected. No, we don’t want it buried in the backyard losing purchasing power.

We want it to have some growth. Historically, we could use several asset classes to find something that provides interest or dividends. We’re looking for something that will earn four to six percent on average. This enables us to leave our growth bucket alone for ten years like Buffett suggests and capture the returns of the market.

Does this philosophy resonate with you?

Our approach enables us to tell our clients, like I tell Amelia about school, that we don’t have to be nervous about market volatility. When the difficult times come in the market hopefully you’ll remember the team at Clients Excel set your portfolio up with ten years of income. This gives the market time to recover from any potential losses it may face. We do this because our goal is for it to enable you to be worry free in retirement.

Don’t fall into the trap of being completely in equities or pulled out of the market completely. If we’re all in equities, we are suffering this year. And if we are trying to time the market by selling and buying back in at the right time we’ll likely be disappointed.

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