Investment Assets The fifth bucket is your investment bucket. Not all people actually use this bucket, but in
cases where it is used it can easily become the largest of all of the buckets and give you the most long-term financial security. This bucket contains those non-liquid investment assets,
such as rental real estate, your company(s), long term non-liquid investments, or an expected inheritance.
Throughout a person’s working life, if they own a company and that company is their major
source of income the salary and wages from this asset are added to the Liquid Assets Bucket. However, the increase in value stays in the Investment Assets Bucket until there is a liquidity event. If there is a liquidity event, the proceeds are added back to the Liquid Assets Bucket.
With proper planning and a well thought out exit strategy, liquidating a major investment asset can add a lot of value to the Liquid Assets Bucket and provide you with enough assets in that bucket to supplement your cash flow from the other buckets.
In many cases, if a person uses investment assets, like rental real estate, to supplement their annual income, there may never be a liquidity event for them. This is due to the fact that many times it is often more beneficial to pass these assets to other family members through a well thought out estate plan.
As a person adds to these buckets over the course of their life, the investment plan might only need to be updated once or twice a year. As the person gets closer to “retirement” and begins planning to live off of these assets, the investment
advisor’s work is more frequent and should move to 3-4 updates per year. This ensures that the person will receive pro-
50 | Five Buckets, Four Shovels, a Beach and a Map
