As I write this, headlines are dominated by news of Russia’s invasion of Ukraine, soaring inflation rates, and dropping stock markets. These scary headlines can, understandably, lead to a sense of anxiousness on the part of investors. Times like these illustrate why the Master’s team recommends positioning money using a bucketing strategy.

A bucketing approach to asset positioning involves deciding when money will be needed to fulfill a goal or satisfy ongoing living expenses. No one can reliably predict where the market is heading next or when the next hiccup will occur. As a result, the sooner money is needed, the more conservative the investment portfolio should be. Below are some general rules of thumb related to positioning your money:

• Have an adequate emergency fund sitting in an FDIC-insured bank account. This is usually equal to about six months’ worth of living expenses. This way, if a sudden loss of income occurs or an unexpected expense pops up, you know you will have easy access to cash.
• Plan for expenses you feel you will likely incur within the next year or eighteen months and have the cash needed for these costs set aside in savings. As we are experiencing right now, the stock market is unpredictable in the near term. It is prudent not to invest money in the stock market that you will need to cover an upcoming expense.
• When you consider investing money beyond what is needed for the aforementioned items, work with your advisor to decide your aptitude for risk and your expected time horizon. Any appropriately positioned investment portfolio should fully consider all circumstances that could impact your financial picture.

What about you? How have you decided where and when to invest money?