Financial Freedom Series: Building Blocks to Wealth (Part 2)

Biblical principles and cutting-edge money management wisdom to help you…

Honor God with your money
Build wealth
Shrink your debt
Build towards financial freedom

“But remember the Lord your God, for it is he who gives you the ability to produce wealth.” (Deuteronomy 8:18)

“Good planning and hard work lead to prosperity, but hasty shortcuts lead to poverty.” (Proverbs 21:5)

“I will guide you along the best pathway for your life. I will advise you and watch over you.” (Psalm 32:8)

“The wise man saves for the future, but the foolish man spends whatever he gets.” (Proverbs 21:20)

“The rich rule over the poor, and the borrower is the slave of the lender.” (Proverbs 22:7)

“But blessed are those who trust in the Lord and have made the Lord their hope and confidence. They are like trees planted along a riverbank, with roots that reach deep into the water. Such trees are not bothered by the heat or worried by long months of drought. Their leaves stay green, and they never stop producing fruit.” (Jeremiah 17:7-8)

“Hope deferred makes the heart sick, but a dream fulfilled is a tree of life.” (Proverbs 13:12)

Many are…

Battling to make ends meet,
Living above their means,
Cash-strapped,
Debt-ridden,
Just trying to survive,
Going through the motions, and
Completely disillusioned.

Ask God for Help

You do not need to face your financial affairs alone.

God wants to walk the journey with you.

Choose to Change

You can turn your financial situation around. With God’s help and a plan, you can change how you manage your money.

I believe that with God’s help, a plan, and some discipline, you can break the debt cycle and build toward a fruitful financial future.

Today, we are going to look at THE 3 BUCKET APPROACH TO INVESTING:

Sir John Templeton, a well-known philanthropist and highly respected investor, became wealthy by pioneering the use of globally diversified mutual funds (i.e., Unit Trusts), and he came up with a strategy known as the “THREE BUCKET” ASSET ALLOCATION STRATEGY…

Sir John Templeton suggested that you should…

Decide what percentage of your income you want (or can afford) to invest
Then allocate your savings and investments into 3 buckets.

Sir John Templeton’s 3-BUCKETS consist of…

A SECURITY BUCKET
- Bucket 1 – to provide safety and cover your needs,

A GROWTH BUCKET
- Bucket 2 – to grow funds to meet your future plans and objectives

A DREAM BUCKET
- Bucket 3 – to help you achieve your future dreams

He suggests that you consider diversifying your investment savings between the various buckets, in line with your needs and goals.

By determining your asset allocation in advance and sticking to your plan, you will avoid the temptation of spur-of-the-moment decisions.

The 3 BUCKET APPROACH TO INVESTING…

BUCKET 1: CREATE A SECURITY BUCKET

This is where you save up money to secure your future
Your first investments MUST be put into this bucket.

The funds you put into your SECURITY BUCKET can include:

CASH – A contingency fund where you can build up a reserve to fund unforeseen emergencies that may arise from time to time. You may, for example, want to build up 3-6 months’ backup income to provide cash flow security. (A bank savings account will be an appropriate investment vehicle to take care of this need.)
HOME
INCOME INVESTMENTS (Eg, if you are retired, you need to secure your income needs)

AIM: The funds that you place in your SECURITY BUCKET should remain invested. You should allow all profits to be reinvested.

BUCKET 2: CREATE A GROWTH BUCKET

This bucket is to grow funds and create wealth over various terms.

The funds you put into your GROWTH BUCKET can include:

UNIT TRUSTS,
GROWTH INVESTMENTS,
SHARES
RETIREMENT SAVINGS (A Retirement Plan or long-term investment is ideal to build up your nest egg to cover your golden years)

AIM: Every time an investment in your GROWTH BUCKET matures, you should reinvest as follows …

? of the profits in your security bucket,
? in your growth bucket, and
? in your dream bucket

BUCKET 3: CREATE A DREAM BUCKET

This bucket is to create an opportunity fund to help you achieve your dreams.

The funds you put into your DREAM BUCKET can include:

Investments set aside to fund your WANTS, DREAMS & DESIRES
Investments set aside to fund DREAM HOLIDAYS
Investments set aside to fund your DREAM OPPORTUNITIES (business, ministry, or just funds available to be a BLESSING to others)

AIM: This bucket is to REWARD your family and yourself for taking a disciplined approach in building towards your financial freedom. The dream bucket is to help you build towards your dreams and make them come true.

To Apply the 3 BUCKET APPROACH TO INVESTING, You Need to…

Decide on your PERSONAL ASSET ALLOCATION STRATEGY…

How much do you have AVAILABLE TO INVEST?

Maybe you need to review your budget and make space in order to prioritize your investing goals.

How much are you going to invest in your SECURITY BUCKET?
How much are you going to invest in your GROWTH BUCKET?
How much are you going to invest in your DREAM BUCKET?

It is always vital to first allocate savings to build up your SECURITY BUCKET, in order to cover your needs before you focus on your wants. The SECURITY BUCKET will help you build up financial protection.
Once you have allocated funds towards your SECURITY BUCKET, you can now begin allocating funds towards your GROWTH BUCKET, thereby building up growth investments over time.
Once you have allocated funds towards your GROWTH BUCKET, you can allocate funds towards your DREAM BUCKET, thereby building up funds to help you achieve your dreams and desires.

Make it easy…

I suggest that you automate your investment decision by setting up a debit order to come off your bank account, directly into your allocated investment “bucket”. This will make it easy for you to stick to your plan.

I want to encourage you to invest part of your hard-earned money so that you can build towards FINANCIAL FREEDOM. I must add that when investing, it is crucial to get advice.

Why now consider making use of THE 3 BUCKET APPROACH TO INVESTING?

I want to encourage you to re-examine our priorities: