I’m Ray Lucia Jr., CPA, PFS, and the founder of Buckets FP, a vibrant community dedicated to excelling in financial services through our unique approach known as The Bucket Strategy®. While many firms have tried to replicate our method, none of them have the decades of real-client experience backing their strategies that we do.
The Bucket Strategy® stands out not just because of its longevity but also due to its solid foundation in modern academic research and evidence-based data. Conventional retirement planning wisdom, rooted in theories like Harry Markowitz’s Modern Portfolio Theory from over half a century ago, is in desperate need of an update to match today’s financial landscape.
My journey with The Bucket Strategy® began in 2000 when I left a big four CPA firm in Los Angeles to join my father’s financial planning business in San Diego—a business I would later acquire. My timing coincided with the Dotcom Stock Market Crash. Despite the market turmoil and significant losses, what struck me the most was the calm within our firm and the lack of panic among our clients. I really couldn’t believe what I was seeing. This was my first real introduction to the resilience that’s built into The Bucket Strategy®.
The strategy encourages investors to match their assets with their liabilities by segmenting their portfolios into different “buckets” based on their personal risk assessment and liquidity needs. This method involves setting up short, mid, and long-term buckets. A client’s immediate financial needs are met from the less volatile short and mid-term buckets, thus preserving the long-term bucket, which includes more volatile stocks, for future growth. This setup meant our clients didn’t need to sell their stocks at a loss during the market downturns – -which explains the complete lack of panic during the dot com crash.
Fast forward to 2007, and I found myself witnessing another severe market downturn during the Global Financial Crisis. Once again, the principles of The Bucket Strategy® shielded our clients from the need to make panic-driven financial decisions. The strategy’s focus on long-term planning and avoiding the sale of volatile assets during market lows proved its efficacy once more, as evidenced by the strong recoveries and sustained growth in subsequent years.
This experience not only provided invaluable training but also highlighted the wisdom of Occam’s Razor, which suggests that the simplest solutions are often the best. The Bucket Strategy®, while backed by rigorous research, thrives on its straightforward, commonsense approach, making it easily understandable and highly effective.
Clients appreciate the simplicity of the strategy, which can be summarized quickly: “By prioritizing spending from stable accounts and leaving riskier investments to grow, investors avoid the need to sell at a loss for income needs.” This basic yet powerful concept resonates well because it combines practicality with scientific principles, making it not just a smart choice but a preferred one among those who seek both stability and growth over time.
The success of The Bucket Strategy® underscores the importance of a method that not only withstands the test of time but also simplifies decision-making in complex financial climates. It’s a testament to the strategy’s design and its ability to meet the needs of clients through various market conditions, reinforcing why The Bucket Strategy® is more than just a planning technique—it’s a pathway to a client’s confident and secure financial future.
