"I'm 15 years from retirement. Should I be splitting my portfolio into buckets?"
I've received several variations of that question in response to my model bucket portfolios. My answer, in short, is that the bucket approach--essentially segmenting a portfolio by time horizon--is most useful for retirement planning. Not only does an in-retirement bucket portfolio provide ready cash reserves if the long-term components of the portfolio are at a low ebb (and, therefore, not good candidates for selling) but in better market environments, it also facilitates easy rebalancing to shake off income for living expenses. By contrast, a bucketed portfolio will tend to be less useful for accumulators, who are relying on their salaries, rather than their portfolios, to meet their day-to-day cash needs.
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Christine Benz does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.