The Only Investing Rule You Will Ever Need

Tyler Gardner (0:00)

Stop investing based on your age alone. Start investing based on when you need the money. Your timeline is your allocation.

Hello, friends. This is Tyler Gardner welcoming you to another episode of Your Money Guide on the Side, where it is my job to simplify what seems complex, add nuance to what seems simple, and learn from and alongside some of the brightest minds in money, finance, and investing. So let's get started and get you one step closer to where you need to be. All right. Welcome back. A few months ago, we released an episode called The Real Financial Order of Operations, where I walked you through the mathematically optimal sequence for deploying every dollar you save. We started with putting on our own oxygen mask, then we got the employer match, then we paid off high interest debt, then you got term and disability insurance, then Roth IRA, then HSA, et cetera, et cetera. Not going to lie, it was and continues to be a useful episode for you to use as a guideline, regardless of whether you follow it step by step. And apparently, you all liked that episode, and it struck a nerve, because that episode became one of our most downloaded of 2025 I got tons of emails, and most importantly, a bunch of you actually left reviews on Apple and Spotify, saying it helped you finally understand where your money should go. So here's my familiar ask. If this episode ends up being just as helpful, please consider doing me one favor and leaving a review on Apple podcasts or Spotify. Write one sentence about what you learned or what you're thinking more about, and then come back. It helps more people find the show, and it's the only way I know whether these deep dive episodes are actually useful, or if I'm continuing to shout into the void while my hounds judge me from the couch. Okay, now that you're back, thank you, and let's get into it. So, here's what happened after the first Order of Operations episode. I got about a hundred emails, I'm rounding, but not by much, that all asked some version of the same question. Tyler, I'm 60 years old, how should I be investing? Tyler, I'm 72 and just retired, what should my portfolio look like? Tyler, I'm 45 and want to retire early, should I be more aggressive or conservative at my age? And every single time I read one of these emails, I wanted to respond with, you're asking the wrong question. Not because the question of what to invest in doesn't matter, it does, obviously. Not because I don't want to help. I do, obviously. But the question itself is built on a flawed assumption that's been drilled into our heads by every financial magazine, robo-advisor, and well-meaning, but outdated CFP since about the 80s. The assumption is this, your age should determine how you invest. You've heard it a million times. Subtract your age from 110 to get your stock allocation, or the slightly more aggressive version, 120 or 130 minus your age. Or if you're talking to someone who really wants to sound sophisticated, use a target date fund based on your expected retirement year. And look, I get it. That's simple. It's easy to remember. It gives you a number. And when you're staring at a blank brokerage account wondering what the hell to do, simple feels like a lifeline. But here's the problem. Age-based investing is lazy thinking disguised as wisdom. Because your age tells me almost nothing about how you should invest. What I actually need to know is, when do you need the money? That's it. That's the question you should be asking. That's the framework. Not how old you are. Not how aggressive you feel. Not whether Mercury is in retrograde, or whether you're a Scorpio who prefers growth stocks. When do you need the money? Today's episode is about burning down the age-based investing model and replacing it with something that actually works. A timeline-based system that matches your allocation to when you'll spend the money, not how many birthdays you've had. We're going deep on the three-bucket system that I introduce in my book that's coming out in December 2026 More on that later. We're going to walk through real examples of people at the exact same age who should be invested completely differently. We're going to cover the specific funds and allocations you should use at each level. And we're going to define the ten terms you actually need to know so you can stop feeling like investing in some secret language only finance bros understand. So consider this part two of the real order of operations. And if part one told you where to put your money, part two is going to tell you how to invest it once it gets there. Let's go. All right, let's start with why, how should a 60-year-old invest is the wrong question. Here are two people. Both are 60 years old. Both have about $2 million saved. Both are in good health. Both live in the same city, have similar expenses. And just to make this really tidy, both drive Subarus. Because why not? Person A, retired last year, sold the business, has a pension that covers 80% of living expenses. Social Security kicks in at 67 and will cover the rest. So the $2 million? That's legacy money earmarked for grandkids' college funds and maybe a cabin in Montana. Person B, still working, hates the job, no pension, no inheritance coming, plans to retire in two years and will need to live off that $2 million for the next 30-plus years. Now, here's the question. Should Person A and Person B invest the same way? If you're using the age-based model, the answer is, yeah, they'll be invested the same. They're both 60 Subtract 60 from 110, you get 50% stocks, 50% bonds, lock it in, call it a day, Investor B and A are both in good shape. But that's insane. Person A doesn't need that $2 million for 15 plus years. They should be 100% in stocks. Aggressive, growth-oriented, compounding like crazy because they've got some time. A market crash in year two, who cares? They're not touching the money until year 15 But Person B needs that $2 million starting in two years. They should be moving aggressively towards bonds and cash right now. Because if the market drops 40% in year one and they're forced to start selling shares at depressed prices in year two, they're cooked. That's called sequence of returns risk, and it can be a retirement killer. Same age, completely different allocations. And the age-based model can't tell the difference. Let's give you another example. Person C, 30 years old, saving for a house down payment in 18 months, has $40,000 set aside. Person D, 70 years old, fully retired, living comfortably off social security and a pension, has 40,000 in a brokerage account earmarked for a dream trip to New Zealand in 10 years. Who should be more aggressive? If you said Person C because they're younger, congratulations, you just lost some $12,000 when the market dropped right before they needed to buy the house and now they have a condo. The right answer is Person D. They have a decade. Person C has 18 months. Person C should be in cash or short-term bonds. Person D, given the 10-year timeframe, should be 100% in stocks. Are you seeing the trend here? Age doesn't matter. What matters is, when do you need the money? And once you start asking that question, once you stop thinking in terms of I'm X years old, so I should be Y% in stocks, and start thinking in terms of I need X amount of money in Y years, so here's how I should invest it, everything actually gets even more simple. You're not guessing. You're not following some arbitrary rule. You're just matching your timeline to your allocation strategy, which brings us to the system. And I will call it the three bucket system, because let's be honest, there aren't many synonyms for bucket, and I couldn't call myself a personal finance influencer if I didn't at some point introduce a bucket system. Here's the framework that replaces all the age-based nonsense. And it's crazy simple. Bucket 1, money you're going to need in to 2 years. Bucket 2, money you're not going to need for 2 to 10 years. Bucket 3, money you don't need for 10 plus years. That's it. Every dollar you have goes into one of these three buckets based on when you'll spend it. And each bucket has a different investment strategy because each bucket has a different timeline. Let's break them down one by one. This week's episode is brought to you by Fabric. Let's talk about the financial task that lives permanently on everyone's to-do list right next to clean out the garage and actually read that user agreement before clicking accept. Term life insurance. 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And if you're thinking I already have coverage through work, go look up the actual number. Most employer policies cover one to two times your salary, which sounds fine, until you do the math on replacing decades of income. And the moment you leave that job, that coverage can walk right out the door with you. Fabric has nearly 2,000 five-star reviews on TrustPilot, and 10 minutes from right now, you can have this handled. Go to meetfabric.com/tyler and cross this off your list. That's meetfabric.com/tyler.