Making decisions around positioning your investments, is difficult at the best of times. Many investors can suffer from FOMO (fear of missing out) when markets are going up rapidly, while the reverse can be true during declines. 2022 has been a difficult year throughout all markets, which can leave investor searching for "the right way" to do it.

 

The answer is not so simple as each investor has there own unique set of objectives, which must be paired with an even more unique set of tolerances for risk. In a piece published this week by RBC GAM analyst Sayada Nabi, we learn about a portfolio management process known as bucketing.  

 

In a simple explanation, bucketing one's portfolio makes allocations to 3 separate segments. 

• short term segment which holds 3-5 years of annual cash flow as well as an emergency fund allocation. Low risk/high liquidity
• medium term which holds 3-7 years annual cash flow, and can be slightly higher up the risk spectrum
• long term which is meant to be invested for.....the long term. This segment is where portfolio growth will come from.

 

I have included a link to RBC GAM's Bucketing Tool here. Try it out, and if you would like to talk about this further, give us a call!