Sleeves or Buckets?

Like most investors, I learned early about the elegance of the 60/40 portfolio.

Sixty percent stocks for growth. Forty percent bonds for stability.

I studied why it worked. Stocks historically delivered long-term returns, bonds reduced volatility, and periodic rebalancing enforced discipline.  60/40 has proved itself as a durable framework. It wasn’t exciting, but it was resilient.

I understood its importance. It shaped how I thought about diversification, risk, and balance—and it still does.

For many investors, 60/40 remains a perfectly reasonable default, particularly for those saving steadily, reinvesting dividends, and not yet drawing on their portfolios.

When 60/40 feels incomplete

The issue wasn’t whether 60/40 worked. It clearly had. The issue was what happens when a portfolio shifts from accumulating wealth to supporting spending. When markets fall, the textbook advice is straightforward: rebalance. Sell bonds. Buy stocks.

That’s sound in theory. It’s harder in practice when:

• Stocks and bonds fall together
• Interest rates are rising
• Withdrawals are funding real expenses

At that point, the central question isn’t about expected returns. It’s more basic: Where does my spending money come from when markets misbehave? That question led me to buckets.

Buckets: a spending framework

The bucket approach organizes money by time.

• Short-term bucket: cash for near-term expenses
• Intermediate bucket: bonds for the next several years
• Long-term bucket: stocks for long-term growth

Buckets made immediate sense. By separating spending from growth, they reduce the risk of selling stocks at the wrong time and provide emotional comfort during market declines.

Buckets work—and they work well—especially for managing sequence-of-returns risk early in retirement. But over time, I noticed a limitation.

Buckets answered when money would be spent. They didn’t fully explain why I owned each investment. That realization pushed me toward sleeves.

Sleeves: a portfolio framework

At first, sleeves sounded like semantics. Aren’t sleeves just buckets with a different name?

In practice, they aren’t. Buckets are time-based. Sleeves are function-based.

Instead of organizing assets by years of spending, I began organizing them by roles:

• Growth sleeve: assets whose job is long-term compounding
• Income sleeve: assets whose job is reliable cash flow
• Cash sleeve: assets whose job is flexibility and stability

Each sleeve has a purpose. Each earns its place. Most importantly, each sleeve is judged differently.

Why sleeves work better for me

With sleeves, I stopped asking whether an investment was “good” or “bad.”

Instead, I ask: “Is this investment doing the job I hired it to do?”

Growth assets don’t need to produce income. Income assets don’t need to be exciting. Cash doesn’t need to outperform anything.

This shift changed how I respond to markets. Volatility in one sleeve doesn’t feel like failure—it’s simply that sleeve doing its job.

A framework, not a verdict

This isn’t an argument against 60/40 or buckets. 60/40 still matters as a foundational lesson in diversification and discipline. Buckets remain a powerful tool for clarifying spending.

Sleeves simply work better for me because they move beyond spending and toward understanding—understanding what each part of the portfolio does, why it’s necessary, and how the pieces work together.

My evolution wasn’t from right to wrong, but from theory to application:

• 60/40 taught balance
• Buckets taught security
• Sleeves taught purpose

Today, I think less in percentages and more in jobs—and that has made me more disciplined, and more comfortable with uncertainty.