The Sequence of Returns Nightmare

When you are accumulating wealth, market crashes are great because your monthly SIP buys more mutual fund units at cheap prices.

In retirement, the reverse is true: if the market crashes 30% and you sell equity to pay for groceries, your corpus suffers irreversible destruction.

How the 3-Bucket Architecture Protects You:

  • Bucket 1 (Years 1-3): Liquid FDs & Arbitrage Funds (Safe Cash for immediate living needs).
  • Bucket 2 (Years 4-10): SCSS, POMIS, and Target Maturity Debt Funds (Guaranteed Income & Stability).
  • Bucket 3 (Years 11+): Nifty 50 Index & Flexi-Cap Funds (Long-Term Compounding Growth).

The Refill Mechanism

  • Every month, an automated transfer moves living cash from Bucket 1 to your primary spending account.
  • When the stock market has a booming year (Bucket 3 is up 20%), you trim equity profits and refill Bucket 1.
  • If the market is in a deep bear recession, you touch nothing in Bucket 3 and calmly live off Bucket 1 and Bucket 2 for up to 10 years!