A Bucket List Needs
A Bucket Plan
THE BUCKET LIST – a phrase made popular by a Hollywood movie of the same title, telling the story of two terminally ill patients who go on an adventure of a lifetime to fulfill their dreams.
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During that journey of accomplishing their goals, they develop an unlikely friendship and find deeper meaning in life.
Since the movie, it has become quite popular to draw up bucket lists, albeit with less drama.
The idea behind a bucket list is to create a list of things you hope to do before you “kick the bucket”. But for most people, it is not about waiting until the last minute to tick off a laundry list of amazing things to do and places to go. Instead, it’s about giving focus to the things that make us feel most alive and to motivate us to accomplish these goals during our lifetime.
While you may not complete every item on your list, you will likely have completed some,and received a sense of accomplishment. The experiences on your list may turn out to be the ones that impact you most deeply.1
When is a good time to make a bucket list? Now is as good as any. After all, why put your dreams on hold?
How do you make one?
Get comfortable and open up a notepad. Start by thinking about the things that are important to you. The goal of a bucket list is to find meaning, not to fill a to-do list. Do some research and brainstorm for creative ways to fulfill the ideas that come to mind. Perhaps it starts as a raw thought. For example, your dream is to do a road trip with your children. You may then solidify the idea by researching possible journeys – such as driving across the United States or along Australia’s Great Ocean Road in a Recreational Vehicle (RV)? Find one which resonates with you most.
Next, reflect on all those times you have said, “One day I will (Fill in the blanks)_____.”. Did you see someone sing on stage and mutter those words? Did you ever say “One day I will write a book? Bake a cake? Buy a house by the sea?” It does not even need to be something monumental to qualify for the list – just something that matters to you. Some items on your list may even seem laughable to others but if it’s important, exciting, confidence boosting and perhaps even scary to you – go ahead – write it down. Whatever it is, it will feel amazing when you cross them off one by one.
Periodically, review your list. If your attitude towards an item on your list has changed, remove the item or reshape them. The idea is to strive for fulfillment and inner growth, not to tie yourself down to things that no longer feel a part of who you are.2
Once you have your list done, share it with others. Who knows, they may want to join you on your grand adventure.
Okay, so you’ve got your list, now what?
While some of the best things in life are free, the rest costs money. A ride on the Alaskan cruise is anything but cheap. So will your bucket list remain a pipe dream? Not necessarily. That’s where the bucket plan comes in.
The bucket plan approach is based on the study of behavioural portfolio theory by Nobel Prize winner Harry Markowitz and leading behavioural economics expert and finance professor and author Meir Statman. From their study, they theorise that if investors divide their portfolios into mental account layers measured by risk, they can counter nervous investment errors.3 What does that mean in layman’s language? You will understand when you see the bucket plan in action.
Let’s say you have an investment portfolio worth RM1 million and you also have 3 different-sized buckets. Each bucket is an investment goal. Bucket #1 is labeled “Retirement”, the second is “Children’s Education” and the third could be for your bucket
list item such as “Hot-air balloon vacation”. Of course, you can have more buckets, depending on your number of investment goals.
The larger the bucket, the larger the amount of funds it gets. So for our example, the largest bucket holds your retirement funds. The bucket for your hot-air balloon vacation is smaller than your children’s education.
Then, mark each bucket high, low or medium investment risk. Next, consider whether each bucket is short-term, medium-term or long-term. By doing so, you would have identified potential asset allocations for each bucket.
For instance, you may place RM700,000 of your portfolio total into your retirement bucket and aim to grow it to RM3 million in 20 years. That would be a long-term investment. If your retirement date is still a long way down the road, you may want to consider taking on more risk with an asset allocation that is higher in equities. On the other hand, the hot-air balloon vacation for you and your spouse may require
RM22,000 and you hope to fulfill this dream in 2 years. For short-term buckets, you may look into bonds or cash equivalents. As for medium-term buckets, you may want to explore balanced unit trust funds. In general, the shorter the term, the lower the risk that should be assigned to the bucket. So if the example above is reversed and retirement is just 2 years away, you may want to assign the funds to less risky investments to preserve capital.
Each bucket on your portfolio can be managed separately to achieve their goals. You may want to be flexible and try different investment instruments and asset allocations to find the best fit. Once your bucket plan goals are fulfilled, move on to other goals. In this way, you can create a financial plan that not only funds your life but also the aspirations on your bucket list.
If you need assistance with the asset allocation of your portfolio, please feel free to talk to your Relationship Manager or walk in to any HSBC branch.
Are these on your Bucket List?
Here are the 20 most popular items (in descending order) as ranked by users of www.bucketlist.net, a website where you can make a list and share it with others.
20 Ride a gondola in Venice
19 Go para-sailing
18 Learn to surf
17 Buy a house
16 Visit the Grand Canyon
15 Go white water rafting
14 Send a message in a bottle
13 Donate blood
12 Write a book
11 See the Pyramids in Egypt
10 Go scuba diving
9 Go zip lining
8 Ride an elephant
7 Run a marathon
6 Get married
5 Go on a cruise
4 Swim with dolphins
3 Get a tattoo
2 Skydive
1 See the Northern Lights
Sept 2014
