Episode 127 – Investment Buckets Explained: Where Should Your Money Go at Every Stage of Life?

“Investment buckets” may sound simple, but the term can mean very different things. Are the buckets based on risk, when you will need the money, what the money is for, or how it will be taxed?

In this episode, Money Pig co-hosts Tim Goodwin and Joe Beckford bring clarity to this often-confusing strategy. They explain how emergency savings, investment risk, time horizons, and tax-free, tax-deferred, and taxable accounts can work together as part of one personalized financial plan.

You’ll also learn why the location of your investments matters and how thoughtfully sequencing withdrawals in retirement may help reduce your lifetime tax burden.

🎧 Listen now to discover whether your money is in the right “buckets” for your life today, your future retirement, and even the legacy you hope to leave behind.

Want help creating a strategy for your different accounts? Schedule a complimentary introductory call with our team.

Additional Resources

https://www.goodwininvestment.com/what-do-i-do-with-my-401k-when-i-leave-my-job/ 

https://www.goodwininvestment.com/navigating-the-new-trump-accounts/

​​The following transcript of the podcast audio was software-generated, and not reviewed for accuracy. Therefore, the transcript below should not be used without verifying the validity and accuracy of its content. Please contact Goodwin Investment Advisory with any questions.

Joe Beckford (00:01)

And welcome back to the Money Pick Podcast. We’re your hosts, Joe Beckford. And Tim Goodwin. Nice. And today we are super excited to discuss investment buckets explained. Where should your money go at every stage of life? But Joe, before we do, please. Tell me something funny. I’ll do my best to see the struggle’s real. I’m waiting. my wife Maureen asked me why we had five different buckets in the garage the other day. Ooh.

Tim Goodwin (00:01)

And welcome back to the Money Pick Podcast. We’re your hosts, Joe Beckford. And Tim Goodwin. Nice. And today we are super excited to discuss investment buckets explained. Where should your money go at every stage of life? But Joe, before we do, please. Tell me something funny. I’ll do my best to see the struggle’s real. I’m waiting. my wife Maureen asked me why we had five different buckets in the garage the other day. Ooh.

Joe Beckford (00:31)

Five buckets in the garage. I put my car in the garage. So tell me why do you have five buckets in the garage? I don’t know. It’s what I do. Well, there’s no room because I have five different buckets in mine. And she asked why and I told her it was for diversification. Whomp, womp, womp, womp. Is there a button for that? Well, there it is. There it is. Thank you. That’s better. Help us out, Joe. What you got?

Tim Goodwin (00:31)

Five buckets in the garage. I put my car in the garage, so tell me why do you have five buckets in the garage? I don’t know, it’s what I do. Well, there’s no room because I have five different buckets in mine. And she asked why, and I told her it was for diversification. Whomp, womp, womp, womp. Is there a button for that? There it is. Thank you. That’s better. Help us out, Joe. What you got?

Joe Beckford (00:53)

So we’re talking about buckets, right? What why did the bucket go to the doctor? I don’t know, Joe. Why? He was feeling a little pale. Why we got the crates too. Man, this is we’re we’re pretty high end here with our our sound effects. Shout out, shout out to Terra. The jokes aren’t getting any better sound effects. there’s well, watch out. It might get out of control. The sound effects are getting better, but the jokes are still bad. Yeah, that’s right. That’s right. Some things never change. Joe, would you like to share something interesting about yourself with the audience?

Tim Goodwin (00:53)

So we’re talking about buckets, right? What why did the bucket go to the doctor? I don’t know, Joe. Why? He was feeling a little pale. Why and we got the crates too. Man, this is we’re we’re pretty high end here with our our sound effects. Shout out, shout out to Terror. The jokes aren’t getting any better sound effects. watch out. It might get out of control. The sound effects are getting better, but the jokes are still bad. Yeah, that’s right. That’s right. Some things never change. Joe, would you like to share something interesting about yourself with the audience?

Joe Beckford (01:25)

1. You have to go first. that’s right. I want to hear your interesting thing. Okay. Well, I thought it would be interesting to share it that I was really into camping a lot. Yep. As as a student, as a kid, and so I joined Boy Scouts up in New England, which was pretty fun ’cause we were like, you know, it gets cold up there. I remember like camping in the snow. but yeah, decided to take it all the way to the end and actually got my Eagle Scout, you know, kind of

Tim Goodwin (01:25)

1. You have to go first. that’s right. I want to hear your interesting thing. Okay. Well, I thought it would be interesting to share it that I was really into camping a lot. Yep. As as a student, as a kid, and so I joined Boy Scouts up in New England, which was pretty fun ’cause we were like, you know, it gets cold up there. I remember like camping in the snow. but yeah, decided to take it all the way to the end and actually got my Eagle Scout, you know, kind of

Joe Beckford (01:53)

coming in hot there right there in high school. So it gets difficult to finish in high school, you know, because of fumes.

Tim Goodwin (01:53)

coming in hot there right there in high school. So it gets difficult to finish in high school, you know, because of fumes.

Joe Beckford (01:59)

Fumes. Mm-hmm. Perfumes and gas fumes. And you get a little distracted and then you go get a job to pay for those things. Right. And and you don’t live in the woods anymore. So it’s hard to finish up the merit badges and you gotta end the Eagle Scout with like that big Eagle Scout project. So the last couple steps for a lot of Eagle Scouts takes the longest just because you’re getting older and got competing priorities with your time. So sorry, that was a long what’s interesting with Neil’s talk about.

Tim Goodwin (01:59)

Fumes. Mm-hmm. Perfumes and gas fumes. And you get a little distracted and then you go get a job to pay for those things. Right. And and you don’t live in the woods anymore. So it’s hard to finish up the merit badges and you gotta end the Eagle Scout with like that big Eagle Scout project. So the last couple steps for a lot of Eagle Scouts takes the longest just because you’re getting older and got competing priorities with your time. So sorry, that was a long what’s interesting with Neil’s talk about.

Joe Beckford (02:29)

you

Tim Goodwin (02:29)

you

Joe Beckford (02:29)

Joe. So my interesting thing is I am not an Eagle Scout. That’s that’s really interesting. Boy Scouts did do a lot of camping and love camping and I love being outdoors, but I have zero merit badges to my name. So it wasn’t Boy Scouts, you’re just doing it with your fan. Yeah. That’s cool. Yeah. That’s super cool. Where did you like what’s what’s a what’s a favorite spot or memory from your camping days? usually we would camp beside a lake. Always a we would tow the boat. We’d sit in a we’d have a camper and we would

Tim Goodwin (02:29)

Joe. So my interesting thing is I am not an Eagle Scout. That’s that’s really interesting. Boy Scouts did do a lot of camping and love camping and I love being outdoors, but I have zero merit badges to my name. So it wasn’t Boy Scouts, you’re just doing it with your fan. Yeah. That’s cool. Yeah. That’s super cool. Where did you like what’s what’s a what’s a favorite spot or memory from your camping days? usually we would camp beside a lake. Always a we would tow the boat. We’d sit in a we’d have a camper and we would

We’d

Joe Beckford (02:59)

Would just set out at a little cove and stay there for the whole weekend. That’s a that’s a different kind of camping. It was different kind of camping. Yeah. Hiking the Appalachian Trail and setting up a tent in the round. This was like water skiing and then you come in and have lunch. And yeah, it was, I mean, it was not clamping. It was legit camping. There were no you know latrines anywhere. So you had to figure that out. Go natural. Yeah. Shovel baby. Yeah, exactly. it that qualifies as camping to me. If we’re still got anybody left that’s just chomping at the

Tim Goodwin (02:59)

just set out at a little cove and stay there for the whole weekend. That’s a that’s a different different kind of camping. It was different kind of camping. Yeah. Hiking the Appalachian Trail and setting up a tent in the right. And this was like water skiing and then you come in and have lunch and yeah, it was I mean it was not clamping, but it was legit camping. There were no you know, latrines anywhere. So you had to Yeah, figure that out go natural. Yeah. Shovel baby. Yeah, exactly. it w that qualifies as camping to me. If we’re still got anybody left that’s just chomping at

Joe Beckford (03:30)

They want to know about buckets. We should probably get into it.

Tim Goodwin (03:30)

They want to know about buckets. We should probably get into it.

Joe Beckford (03:36)

that’s right. And you didn’t want to bring that bucket back, actually. my goodness. Wanted to leave it there. Okay. gosh. Mandy off to the sides like I know she’s like the taking so long. gosh. Okay. So let’s talk about investment buckets. and I like to start with why. I like to start with the end in mind. Certainly, folks around here know that during our meetings, we like to start with why. The end in mind. Why are we talking about investment buckets? I would probably say because they’re confusing. you probably hear it a lot. you probably heard an advisor or maybe.

Tim Goodwin (03:36)

that’s right. And you didn’t want to bring that bucket back, actually. my goodness. Wanted to leave it there. Okay. gosh. Mandy off to the sides like I know she’s like the taking so long. gosh. Okay. So let’s talk about investment buckets. and I like to start with why. I like to start with the end in mind. Certainly, folks around here know that during our meetings, we like to start with why. The end in mind. Why are we talking about investment buckets? I would probably say because they’re confusing. you probably hear it a lot. you probably heard an advisor or maybe.

Joe Beckford (04:05)

maybe

Tim Goodwin (04:05)

maybe

Joe Beckford (04:05)

read an article or read something about it. That’s maybe why you’re listening to this pod. Or maybe you’re just trying to learn more about investing and you’ve, you know, you know that something around investment buckets is a strategy. So I think there’s a lot of confusion around it. I think it’s that’s why we want to do this to try to bring some clarity. So the end in mind, you is hopefully by the end of this podcast, you had a little bit of fun listening and getting to know Joe and I a little bit more and also learned about investment buckets, some of the different ways they’re used in our industry and kind of how we think about them. Anything else?

Tim Goodwin (04:05)

read an article or read something about it. That’s maybe why you’re listening to this pod. Or maybe you’re just trying to learn more about investing and you’ve, you know, you know that something around investment buckets is a strategy. So I think there’s a lot of confusion around it. I think it’s that’s why we want to do this to try to bring some clarity. So the end in mind, you is hopefully by the end of this podcast, you had a little bit of fun listening and getting to know Joe and I a little bit more and also learned about investment buckets, some of the different ways they’re used in our industry and kind of how we think about them. Anything else?

Joe Beckford (04:35)

You wanted to add to investment buckets? No, confusing. I think you nailed it right there. All right, so that terminology. Yeah, so go go ahead and unpack, Joe, like when you think about investment buckets, what do you think about, what do you clients typically think about?

Tim Goodwin (04:35)

You wanted to add to investment buckets? No, confusing. I think you nailed it right there. All right, so that terminology. Yeah, so go go ahead and unpack, Joe, like when you think about investment buckets, what do you think about, what do you clients typically think about?

Joe Beckford (04:49)

I think people walk in with different definitions of what buckets are. And I think that’s what makes them confusing, right? Because I’ve had people who have come to me from another advisor and said, you’re gonna do bucket strategy for me, right? And my first thing is, so what does that mean to you? Because that’s different. And and a lot of time so so one definition is, I put my taxes it I put my money in different tax types, right? So maybe I’ve got like rollover IRA, I’ve got Roth IRA.

Tim Goodwin (04:49)

I think people walk in with different definitions of what buckets are. And I think that’s what makes them confusing, right? Because I’ve had people who have come to me from another advisor and said, you’re gonna do bucket strategy for me, right? And my first thing is, so what does that mean to you? Because that’s different. And and a lot of time so so one definition is, I put my taxes it I put my money in different tax types, right? So maybe I’ve got like rollover IRA, I’ve got Roth IRA.

Joe Beckford (05:19)

I’ve got other types of I’ve got taxable accounts and so they’re taxed differently. Some people are like, that’s my spending money for the next year. So that’s gotta be really conservative and the rest of my money is really aggressive. Or this is my my cash bucket and this is my

Tim Goodwin (05:19)

I’ve got other types of I’ve got taxable accounts and so they’re taxed differently. Some people are like, that’s my spending money for the next year. So that’s gotta be really conservative and the rest of my money is really aggressive. Or this is my my cash bucket and this is my

Joe Beckford (05:37)

use now a bucket. This is my college bucket. And so it just it’s confusing to people to use that terminology to me. Yeah. And I feel like when I’ve heard it, like that’s cool. Like you have different purposes, right? That’s what you’re saying. Like the purpose of the bucket or the investment is different. So it looks like a different bucket. I’ve also heard about buckets in terms of like

Tim Goodwin (05:37)

use now a bucket. This is my college bucket. And so it just it’s confusing to people to use that terminology to me. Yeah. And I feel like when I’ve heard it, like that’s cool. Like you have different purposes, right? That’s what you’re saying. Like the purpose of the bucket or the investment is different. So it looks like a different bucket. I’ve also heard about buckets in terms of like

Joe Beckford (05:57)

Levels of risk. Like you have this very conservative bucket, this moderate bucket, and this aggressive bucket. And you’re saying like that that should be tied to a timeline to a purpose, which is exactly, you know, what we would talk about. And I think a lot of financial advisors would agree. when I’ve heard it explained, it’s like a retirement distribution strategy, like a retirement income strategy. And you never know what’s gonna happen in the stock market and it could die and you know, head down really fast and tank, and we’d have a black swan event, so you need to have like all these conservative buckets to live off of, you know, and and it’s

Tim Goodwin (05:57)

Levels of risk. Like you have this very conservative bucket, this moderate bucket, and this aggressive bucket. And you’re saying like that that should be tied to a timeline to a purpose, which is exactly, you know, what we would talk about. And I think a lot of financial advisors would agree. when I’ve heard it explained, it’s like a retirement distribution strategy, like a retirement income strategy. And you never know what’s gonna happen in the stock market and it could die and you know, head down really fast and tank, and we’d have a black swan event, so you need to have like all these conservative buckets to live off of, you know, and and it’s

Joe Beckford (06:25)

I just feel like it overcomplicates something that’s already super complicated, money, finance, investing, strategies. And so at the end of the day, if you have like one very conservative bucket and then a bucket of moderate stuff and then a bucket of aggressive stuff, overall you average back to moderate. Right. Right. Right. And so we we’ve talked before a lot about having an emergency fund and certainly our retirees need to have three to six months of expenses just in savings, not invested, usually at that kind of local checking account.

Tim Goodwin (06:25)

I just feel like it overcomplicates something that’s already super complicated, money, finance, investing, strategies. And so at the end of the day, if you have like one very conservative bucket and then a bucket of moderate stuff and then a bucket of aggressive stuff, overall you average back to moderate. Right. Right. Right. And so we we’ve talked before a lot about having an emergency fund and certainly our retirees need to have three to six months of expenses just in savings, not invested, usually at that kind of local checking account.

Joe Beckford (06:53)

Bank kind of deal, right? Or high yield savings account somewhere. Yes, somewhere, right? So that’s not for investing, that’s for peace of mind. And why when do you need peace of mind? All the time. Yeah, exactly. But like certainly when the market tanks. For sure. Yeah, certainly when the market tanks, you’re like, hey, if whether I need that or not, like we were just reading an article. I was reading an article about you know what? It was an article Tara was writing who spoke in here earlier. She’s you know, she writes a most of our content, and I was

Tim Goodwin (06:53)

Bank kind of deal, right? Or high yield savings account somewhere. Yes, somewhere, right? So that’s not for investing, that’s for peace of mind. And why when do you need peace of mind? All the time. Yeah, exactly. But like certainly when the market tanks. For sure. Yeah, certainly when the market tanks, you’re like, hey, if whether I need that or not, like we were just reading an article. I was reading an article about you know what? It was an article Tara was writing who spoke in here earlier. She’s you know, she writes a most of our content, and I was

Joe Beckford (07:23)

was proofreading one of her pieces before they go out, talking about how we want you to be able to have the strategy to consider your distributions when the market tanks, right? Like if the market’s really gone down, are you able to reduce your distributions or maybe you switch to the kind of this emergency fund kind of idea? So in a way, I guess we do have buckets, but when it comes to the investments that we’re managing for clients, that’s really tied to their overall risk profile based on you know that that boring terminology called the investment policy statement, right? But it’s just a

Tim Goodwin (07:23)

was proofreading one of her pieces before they go out, talking about how we want you to be able to have the strategy to consider your distributions when the market tanks, right? Like if the market’s really gone down, are you able to reduce your distributions or maybe you switch to the kind of this emergency fund kind of idea? So in a way, I guess we do have buckets, but when it comes to the investments that we’re managing for clients, that’s really tied to their overall risk profile based on you know that that boring terminology called the investment policy statement, right? But it’s just a

Joe Beckford (07:53)

Way

Tim Goodwin (07:53)

Way

Joe Beckford (07:53)

that we get to know the client and measure their risk, their appetite for risk, the time horizon, and then help with that risk profile on their accounts. Yeah. Now that doesn’t mean that to your point, like, maybe I’ve got the aggressive over here, I got moderate over here, I my super conservative, got my cash over here. And if you add it all up, you’re like, yeah, Tim, you’re a moderate investor. Yeah, all overall. So what if I just put all your money in moderate? Well, there’s volatility and things go up and down, and that doesn’t make people feel good. And when the market tanks and you’re in a moderate sort of portfolio, you don’t take

Tim Goodwin (07:53)

that we get to know the client and measure their risk, their appetite for risk, the time horizon, and then help with that risk profile on their accounts. Yeah. Now that doesn’t mean that to your point, like, maybe I’ve got the aggressive over here, I got moderate over here, I my super conservative, got my cash over here. And if you add it all up, you’re like, yeah, Tim, you’re a moderate investor. Yeah, all overall. So what if I just put all your money in moderate? Well, there’s volatility and things go up and down, and that doesn’t make people feel good. And when the market tanks and you’re in a moderate sort of portfolio, you don’t take

Joe Beckford (08:23)

Tank

Tim Goodwin (08:23)

Tank

Joe Beckford (08:23)

as much. But that doesn’t mean you don’t go down at all, right? And that doesn’t make everybody feel good. So we do recommend also like that emergency fund like you’re talking about. So three to six months of expenses. And if you’re super conservative, maybe even more than that. I mean, that depends on the individual client and how they’re wired, because we not only have time horizons to use in our money, but we’ve got an internal risk meter. All of us do, right? And it’s not the same for everybody.

Tim Goodwin (08:23)

as much. But that doesn’t mean you don’t go down at all, right? And that doesn’t make everybody feel good. So we do recommend also like that emergency fund like you’re talking about. So three to six months of expenses. And if you’re super conservative, maybe even more than that. I mean, that depends on the individual client and how they’re wired, because we not only have time horizons to use in our money, but we’ve got an internal risk meter. All of us do, right? And it’s not the same for everybody.

Joe Beckford (08:49)

Exactly. And you know, when you’re talking about yeah, there still may be reasons why we would manage money for clients and have different risk levels per account. I think of one of them as you know, sometimes our clients have done an exceptionally well, an exceptionally good job of accumulating assets. And when we do the planning, it’s very clear that there’s probably excess wealth here. maybe they’re maybe they’re kind of

Tim Goodwin (08:49)

Exactly. And you know, when you’re talking about yeah, there still may be reasons why we would manage money for clients and have different risk levels per account. I think of one of them as you know, sometimes our clients have done an exceptionally well, an exceptionally good job of accumulating assets. And when we do the planning, it’s very clear that there’s probably excess wealth here. maybe they’re maybe they’re kind of

Joe Beckford (09:13)

not quite in the go-go years as much too. And so they’re kind of in the slow go to no go years. And they’re just like, we’re just not going to use this money to or Joe, even though we’re trying to be like, hey, go, go travel, go have a good time. They’re like, yeah, this this is all we’re going to spend. And they’re like, wow, there’s this excess wealth.

Tim Goodwin (09:13)

not quite in the go-go years as much too. And so they’re kind of in the slow go to no go years. And they’re just like, we’re just not going to use this money to or Joe, even though we’re trying to be like, hey, go, go travel, go have a good time. They’re like, yeah, this this is all we’re going to spend. And they’re like, wow, there’s this excess wealth.

Joe Beckford (09:29)

And so they go, Yeah, you know what, I just want the kids to have those accounts. So in that case, what what do we do sometimes? We change risk profile, right? I mean, we do that and and a lot of times that ends up I’ve noticed for a lot of our clients that that ends up being in the Roth money. Yep. Because the Roth money is there aren’t very many tax free parties the IRS is throwing. That’s one of them. HSAs are great. Yeah. Five two nine planes if you use them.

Tim Goodwin (09:29)

And so they go, Yeah, you know what, I just want the kids to have those accounts. So in that case, what what do we do sometimes? We change risk profile, right? I mean, we do that and and a lot of times that ends up I’ve noticed for a lot of our clients that that ends up being in the Roth money. Yep. Because the Roth money is there aren’t very many tax free parties the IRS is throwing. That’s one of them. HSAs are great. Yeah. Five two nine planes if you use them.

Joe Beckford (09:57)

Your Roth IRA, but the Roth is like, you know, the the Big Mac Daddy. And that’s the one that a lot of people have money in. And consequently, we tell people, hey, take the tax-free party as long as it’ll last. And so to your point, that sometimes means I’m never going to need that money. Yeah. I’m never going to spend it. So that’s going to go on to a next generation. Well, now I’m not planning to the end of your life. That’s right. I’m planning to

Tim Goodwin (09:57)

Your Roth IRA, but the Roth is like, you know, the the Big Mac Daddy. And that’s the one that a lot of people have money in. And consequently, we tell people, hey, take the tax-free party as long as it’ll last. And so to your point, that sometimes means I’m never going to need that money. Yeah. I’m never going to spend it. So that’s going to go on to a next generation. Well, now I’m not planning to the end of your life. That’s right. I’m planning to

Joe Beckford (10:18)

into that next generation’s life. So you could potentially be a lot more aggressive in that particular account, even though you’re a moderate investor. Yeah. And it’s still in their name and it’s still theirs. So they could still use it if they ever needed it. Medical emergency, whatever, somehow it ran out market tanks and they’re they’re burning through those accounts faster. generally though, the market does what?

Tim Goodwin (10:18)

into that next generation’s life. So you could potentially be a lot more aggressive in that particular account, even though you’re a moderate investor. Yeah. And it’s still in their name and it’s still theirs. So they could still use it if they ever needed it. Medical emergency, whatever, somehow it ran out market tanks and they’re they’re burning through those accounts faster. generally though, the market does what?

Joe Beckford (10:40)

It goes up. It goes up. I wish it was a straight line. Yeah. But maybe maybe people wouldn’t need us that much, Joe. I appreciate the yo-yo and the roller coaster of it keeps us employed, but it does. don’t don’t jump up jump off the roller coaster while it’s head while it’s going. But I think I was just my my point is that that that money’s still there is and often what happens is over that long period of time it’s kind of fun because while we’re in these bull markets, even though they’ve tagged that for their kids or their second generation, they’re saying that their wealth is is really growing.

Tim Goodwin (10:40)

It goes up. It goes up. I wish it was a straight line. Yeah. But maybe maybe people wouldn’t need us that much, Joe. I appreciate the yo-yo and the roller coaster of it keeps us employed, but it does. don’t don’t jump up jump off the roller coaster while it’s head while it’s going. But I think I was just my my point is that that that money’s still there is and often what happens is over that long period of time it’s kind of fun because while we’re in these bull markets, even though they’ve tagged that for their kids or their second generation, they’re saying that their wealth is is really growing.

Joe Beckford (11:10)

Least on that account, probably by the bull market, it’s really capturing most, if not all, of that bull market run. Where those moderate accounts that they’re really

Tim Goodwin (11:10)

Least on that account, probably by the bull market, it’s really capturing most, if not all, of that bull market run. Where those moderate accounts that they’re really

Joe Beckford (11:18)

depending on for distributions, it may not be moving up as far with the stock market because it’s intentionally designed to not move down with the stock market. Right, right. Yeah. something else about buckets is asset location. come on. Right. So that’s just another concept that maybe when you’re learning about somebody talking about buckets and they’re talking about asset location. So unpack that for the audience, Joe, that’s just super excited to learn about asset locations with bucket strategies. So asset location, it kind of depends it can depend where you want to put money.

Tim Goodwin (11:18)

depending on for distributions, it may not be moving up as far with the stock market because it’s intentionally designed to not move down with the stock market. Right, right. Yeah. something else about buckets is asset location. come on. Right. So that’s just another concept that maybe when you’re learning about somebody talking about buckets and they’re talking about asset location. So unpack that for the audience, Joe, that’s just super excited to learn about asset locations with bucket strategies. So asset location, it kind of depends it can depend where you want to put money.

Joe Beckford (11:49)

Right. So we always talk about the the concept of a trifecta of having Roth money, having pre-tax money, and having taxable like a brokerage account money. And

Tim Goodwin (11:49)

Right. So we always talk about the the concept of a trifecta of having Roth money, having pre-tax money, and having taxable like a brokerage account money. And

Joe Beckford (12:01)

To me, the biggest power there is sequencing. Yes. So when we can manage somebody’s projected tax burden, you know, we’re not given tax advice, but we are planning for taxes. And if I have a client with at least those three tax types, you’d be surprised what you can do to s give that person the lifestyle that they need and provide the resources they need and manage their tax burden. And I know one of our advisors, Justin, like kind of lives for that. He’s like, okay, let me figure out how do we

Tim Goodwin (12:01)

To me, the biggest power there is sequencing. Yes. So when we can manage somebody’s projected tax burden, you know, we’re not given tax advice, but we are planning for taxes. And if I have a client with at least those three tax types, you’d be surprised what you can do to s give that person the lifestyle that they need and provide the resources they need and manage their tax burden. And I know one of our advisors, Justin, like kind of lives for that. He’s like, okay, let me figure out how do we

Joe Beckford (12:31)

get the least amount of social security taxable. How do we make sure you’re not gonna pay extra for your Medicare and still send you plenty of money every month to live your life? So Yeah. And to me, like that’s maybe sometimes when people are thinking about buckets, that’s really how we look at it. It’s about the tax type and sequencing based on the tax type. And you know, sometimes we’re gonna blend the distribution rate between say pre-tax and after tax or pre-tax and taxable, right? So

Tim Goodwin (12:31)

get the least amount of social security taxable. How do we make sure you’re not gonna pay extra for your Medicare and still send you plenty of money every month to live your life? So Yeah. And to me, like that’s maybe sometimes when people are thinking about buckets, that’s really how we look at it. It’s about the tax type and sequencing based on the tax type. And you know, sometimes we’re gonna blend the distribution rate between say pre-tax and after tax or pre-tax and taxable, right? So

Joe Beckford (13:01)

I think sometimes folks are reading and understanding that buckets mean, I have some cash here and I have some conservative there and I have moderate there and I have aggressive there, and then I’m gonna start from conservative and start spending my money down and keep filling the buckets up as I fill, you know, spend the conservative. But the reality is we’re thinking more about tax strategies in terms of buckets. And I’m really glad you brought that up. There’s three different types: tax-free, tax-deferred, and taxable.

Tim Goodwin (13:01)

I think sometimes folks are reading and understanding that buckets mean, I have some cash here and I have some conservative there and I have moderate there and I have aggressive there, and then I’m gonna start from conservative and start spending my money down and keep filling the buckets up as I fill, you know, spend the conservative. But the reality is we’re thinking more about tax strategies in terms of buckets. And I’m really glad you brought that up. There’s three different types: tax-free, tax-deferred, and taxable.

Joe Beckford (13:24)

We do look at in terms of sort of like I’m doing air quotes here for the folks just listening, you know, buckets is more about us thinking through your assets and your financial plan for your life and beyond through the bucket lens of the tax type and how to reduce your taxes over your lifetime. So that is a way that, you know, if you’re kind of trying to look through the bucket lens, that is a way I think we’re very, very attuned to looking at the plan.

Tim Goodwin (13:24)

We do look at in terms of sort of like I’m doing air quotes here for the folks just listening, you know, buckets is more about us thinking through your assets and your financial plan for your life and beyond through the bucket lens of the tax type and how to reduce your taxes over your lifetime. So that is a way that, you know, if you’re kind of trying to look through the bucket lens, that is a way I think we’re very, very attuned to looking at the plan.

Joe Beckford (13:52)

Yeah, because that’s definitely not the same for everybody. Distribution strategy for you versus money versus Terra is gonna be different for everybody, depending on what they’ve accumulated, you know, through their lifetime. So, Joe, as you wrap up here, there is a way that we invest, speaking of tax types, a taxable account differently than say tax deferred. There is. Yeah. So there is. Unpack that just a little bit and we’ll just kind of wrap this up and stick a bow on it for our listeners still with us. So we like to

Tim Goodwin (13:52)

Yeah, because that’s definitely not the same for everybody. Distribution strategy for you versus money versus Terra is gonna be different for everybody, depending on what they’ve accumulated, you know, through their lifetime. So, Joe, as you wrap up here, there is a way that we invest, speaking of tax types, a taxable account differently than say tax deferred. There is. Yeah. So there is. Unpack that just a little bit and we’ll just kind of wrap this up and stick a bow on it for our listeners still with us. So we like to

Joe Beckford (14:22)

You

Tim Goodwin (14:22)

You

Joe Beckford (14:22)

know, we do portfolio solutions that we have these wonderful portfolios that we put together, but it is important for tax type, like you were saying. You can trade in an IRA, you can trade in a Roth, you’re not gonna generate taxes or anything. You’re potentially gonna generate some capital gains when we trade in taxable accounts, because as you said, market goes up. It typically goes up, right? So we want to rebalance those things and stuff like that. One thing that we do is try to mitigate how many dollars are taxed.

Tim Goodwin (14:22)

know, we do portfolio solutions that we have these wonderful portfolios that we put together, but it is important for tax type, like you were saying. You can trade in an IRA, you can trade in a Roth, you’re not gonna generate taxes or anything. You’re potentially gonna generate some capital gains when we trade in taxable accounts, because as you said, market goes up. It typically goes up, right? So we want to rebalance those things and stuff like that. One thing that we do is try to mitigate how many dollars are taxed.

Joe Beckford (14:52)

That end up in that portfolio. And so let me unpack that for a minute. So funds that we use pay dividends. The bond funds that we use pay interest. So that all gets kicked cash into the portfolio, right? Well, you get your 1099 at the end of the year from your bank that says, Hey, congratulations, Tim, you made this much in interest this year. Did you feel it? Maybe. Maybe you didn’t ever take it out of the bank, but you’re gonna pay taxes on it. And you’re

Tim Goodwin (14:52)

That end up in that portfolio. And so let me unpack that for a minute. So funds that we use pay dividends. The bond funds that we use pay interest. So that all gets kicked cash into the portfolio, right? Well, you get your 1099 at the end of the year from your bank that says, Hey, congratulations, Tim, you made this much in interest this year. Did you feel it? Maybe. Maybe you didn’t ever take it out of the bank, but you’re gonna pay taxes on it. And you’re

Joe Beckford (15:15)

Brokerage portfolio will do the same. So how do we mitigate that? We look at the bonds and a lot of times that means we’re going to use municipal bonds in there because we’re going to save on taxes in there. Whereas if you looked in your IRA, probably don’t have municipal bonds in those. Yeah. So again, like we’re I think

Tim Goodwin (15:15)

Brokerage portfolio will do the same. So how do we mitigate that? We look at the bonds and a lot of times that means we’re going to use municipal bonds in there because we’re going to save on taxes in there. Whereas if you looked in your IRA, probably don’t have municipal bonds in those. Yeah. So again, like we’re I think

Joe Beckford (15:31)

You know, to to kind of wrap this up, the when Goodwin Investment Advisory Advisors and the planning team is thinking about buckets, a lot of times we’re not necessarily thinking about asset location in in the way that you described it earlier. We’re not necessarily thinking about these conservative buckets that are being filled by other buckets. We’re looking more about overall risk.

Tim Goodwin (15:31)

You know, to to kind of wrap this up, the when Goodwin Investment Advisory Advisors and the planning team is thinking about buckets, a lot of times we’re not necessarily thinking about asset location in in the way that you described it earlier. We’re not necessarily thinking about these conservative buckets that are being filled by other buckets. We’re looking more about overall risk.

Joe Beckford (15:53)

like appetite for risk, which is based a lot on time horizon of that asset, of who needs to use that asset, as well as looking it through the lens of you know, tax efficiency. So all right. Very cool. Well I don’t think that we actually have a specific blog on tax

Tim Goodwin (15:53)

like appetite for risk, which is based a lot on time horizon of that asset, of who needs to use that asset, as well as looking it through the lens of you know, tax efficiency. So all right. Very cool. Well I don’t think that we actually have a specific blog on tax

Buckets. Buckets or types, you know what I mean? So there’s a lot of different confuses everybody. So we did our best here. we’ve got a lot on our blog about about our tax strategy. So you could go to the knowledge center on our website and try to learn some more about that as well. and really like if you’re interested in just kind of sitting down with an advisor and

Joe Beckford (16:12)

Buckets. Buckets or types, you know what I mean? So there’s a lot of different confuses everybody. So we did our best here. we’ve got a lot on our blog about about our tax strategy. So you could go to the knowledge center on our website and try to learn some more about that as well. and really, like if you’re interested in just kind of sitting down with an advisor and

Trying to unpack some of these different strategies that we talked about. Certainly would love for you to go to the website and schedule an intro call. but we love to end the podcast with gratitude, Joe. while you’re thinking about something I will say, and I just kind of referenced them earlier, which is like, I’m just usually say something personal, but I’m gonna say something work-related. I am just super grateful for our advanced planning team because I mean, you have an incredible group of CFPs, you know, some with more experience than others, Joe.

Tim Goodwin (16:32)

Trying to unpack some of these different strategies that we talked about. Certainly would love for you to go to the website and schedule an intro call. but we love to end the podcast with gratitude, Joe. while you’re thinking about something I will say, and I just kind of referenced them earlier, which is like, I’m just usually say something personal, but I’m gonna say something work-related. I am just super grateful for our advanced planning team because I mean, you have an incredible group of CFPs, you know, some with more experience than others, Joe.

Joe Beckford (17:01)

Fair. Not pointing any fingers. This is where you do the I should have done not pointing any fingers. Like they do in Disney. Hello, friends. We mean this guy. And then, you know, really supported by great paraplanners and client service associates. And so it’s really a powerful thing. Like here, your access to advice or strategies is not limited to your advisor. It extends to the whole team because often the advisor is is leaning on the team and the paraplanners for different

Tim Goodwin (17:01)

Fair. Not pointing any fingers. This is where you do the I should have done not pointing any fingers. Like they do in Disney. Hello, friends. We mean this guy. And then, you know, really supported by great paraplanners and client service associates. And so it’s really a powerful thing. Like here, your access to advice or strategies is not limited to your advisor. It extends to the whole team because often the advisor is is leaning on the team and the paraplanners for different

You know, hey, am I considering all the different scenarios, all the different strategies? Is there any other way that we can help you know, my client save taxes? And so usually there’s not a whole lot that’s suggested because the advisor usually has a lot of these strategies down, but sometimes the team will come in or they’re trying, maybe there’s a very unique case or very kind of specific or sophisticated situation. and the whole team will kind of put their heads together to to try to problem solve. So I love when I see that happen. So really grateful for that. It’s nice to have a bench behind you. As an advisor, it’s nice to have a bench behind you.

Joe Beckford (17:29)

You know, hey, am I considering all the different scenarios, all the different strategies? Is there any other way that we can help you know, my client save taxes? And so usually there’s not a whole lot that’s suggested because the advisor usually has a lot of these strategies down, but sometimes the team will come in or they’re trying, maybe there’s a very unique case or very kind of specific or sophisticated situation. and the whole team will kind of put their heads together to to try to problem solve. So I love when I see that happen. So really grateful for that. It’s nice to have a bench behind you. As an advisor, it’s nice to have a bench behind you. I can tell

you.

So a lot of times I don’t do a personal one, but I will do a personal one this time. I am grateful for family and not just I don’t know how you work in your house, but like you’ve got, you know, your brothers and your mom and your dad and then Maureen has family on her side. So I don’t know if you talk about Maureen’s family or my family, but

Tim Goodwin (18:01)

So a lot of times I don’t do a personal one, but I will do a personal one this time. I am grateful for family and not just I don’t know how you work in your house, but like you’ve got, you know, your brothers and your mom and your dad and then Maureen has family on her side. So I don’t know if you talk about Maureen’s family or my family, but

I’m really grateful for what you would consider my wife’s family because I did, I think I did really well. Yeah. Just just yeah, recently had a visit with her dad and stuff. And you know, he anyway just imparts wisdom and stuff, and it’s just really nice to have nice in-laws. Yeah, no kidding. So that’s what I’m grateful for. That’s a great thing to be grateful for. So that’s awesome, Joe. Thanks for sharing that. And thanks for sticking with us. We appreciate you guys listening or watching. Have a great day. Bye-bye. See you next time.

Joe Beckford (18:21)

Really grateful for what you would consider my wife’s family because I did I think I did really well. Yeah. Just just yeah, recently had a a visit with her dad and stuff. And you know, he anyway just imparts wisdom and stuff, and it’s just really nice to have nice in-laws. Yeah, no kidding. So that’s what I’m grateful for. That’s a great thing to be grateful for. So that’s awesome, Joe. Thanks for sharing that. And thanks for sticking with us. We appreciate you guys listening or watching. Have a great day. Bye-bye. See you next time.