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  • Answer: I'm not a fan of the bucket theory other than you should make sure you have enough liquid assets to cover near term expenses. Bucket theory assumes that the funds you will use in the long-term can be more aggressively invested. I am a believer in taking out funds considering this priority: (1) income from Social Security, pensions, annuities, Required Minimum Distributions, and taxable investment interest and dividends, (2) taxable investment principal, (3) deferred-tax principal, (3) tax-exempt investments. I also pay attention to what is needed to rebalance to my target allocation. In general, I put my highest risk investments in deferred-tax investments (or donor advised funds) and my lowest risk investments in taxable investments.

    This is answer was provided by Bud Hebeler

  • Login to rate this answer:   Answered on 6/20/2011
**All above answers are provided as general information only. No warranty is made regarding the fitness or accuracy of the information provided in this answer. You should seek advice from a licensed CPA, attorney or CERTIFIED FINANCIAL PLANNER™ as to your unique financial situation.