You're Doing It All Wrong

Let’s get straight into…no preamble, the question everyone wants answered.

How Do I Actually Figure Out What to Do with My Money?

last weekend, a friend asked me “How do I do it? But I want the short version?”

OK, so no pressure—I’ll just sort your financial future in the next three minutes with no real information, shall I?

Clearly, without fully understanding someone’s specific situation, it’s difficult to give decent advice, but nobody wants to hear that answer.

So, in an effort not to be the “Wellllll... it’s complicated” guy, here are some rules I think about when structuring investments.

Investing and managing your money can be overwhelming.

There are a million different options—having a framework to work from can be the difference between executing and doing nothing at all.

This framework is a simple ‘time-based asset allocation’ approach, where you create specific investment buckets. Instead of just having one messy portfolio, you set up buckets that correspond to specific life goals.

1. Screw your Emergency Fund.

To be perfectly honest, I hate the term Emergency Fund, and I think people set them up all wrong. People view their emergency fund as money that needs to be sitting in the bank, only to be touched if the house catches fire. In reality, this money should be invested and earning a return. The assets you choose just needs to be short-term in nature.

I structure customized T-Bill ladders for clients. I also love setting up a specific bucket for discretionary spending—vacations, big purchases, experiences. If you know you're taking a trip to Ireland in July (other European destinations are available), park that money in a 6-month T-Bill that matures right before takeoff.

Yes, that money is earmarked for something, so it can’t just be thrown into the stock market, but it can still earn 4-5% on a risk-free T-Bill in the meantime. Don’t leave free money on the table.

So, create some buckets and get rid of your savings account—your behavior around why you’re investing will improve, and you’ll get a decent return while you wait.

It’s a no-brainer.

2. Maybe Don’t Gamble Your Wedding Fund on Meme Coins.

Next, look at any major expenses coming up in the next 2–3 years—a down payment on a house, a wedding, anything that’s important but not happening tomorrow.

This is where you match your assets accordingly. Instead of sitting in cash or going all-in on stocks, you use 2+ year Treasuries or other stable investments that align with your timeline.

3. Now For the Fun Part

Once your short-term buckets are set, you’ve freed up a ton of mental bandwidth to focus on the long game—retirement, wealth building, and everything in between.

This is where you can afford to take more risk. Crucially, the risk you’re taking is more palatable because you have clarity on the true timeline of this bucket. As a result, you don’t need to obsess over short-term market moves.

I like splitting long-term money into two buckets:

• Tactical bucket (3-7 years): This is the more actively traded bucket where you take advantage of opportunities in the market as they arise.

• Forever bucket (7+ years): This is a buy-and-hold portfolio focused on getting broad market exposure at a low cost.

The key takeaway is your investment portfolio doesn’t need to be a complete unknown. You can structure it, so every dollar has a purpose.

And if you don’t know where to start or needs some help, just reach out. it’s literally my job…

Two Common Pitfalls to Avoid

Over-Allocation.

One of the most common mistakes I see is over allocation. For some reason, this is especially common with younger investors.

Clients come in and we go through the portfolio they set up a few years previous. Everyone starts with good intentions. At the start it is always manageable, but each year they add 10 new positions, invest more and more money and have less time to truly manage it—before they know it, they’ve got a 70-position stock portfolio, no recollection of why they bought half of them, and no idea what to do next.

My View: Less is More.

If you feel the need to buy 50 stocks, you haven’t done enough research. If you had, you’d have enough conviction to just hold 15 of the best stocks instead of hedging your bets with 50.

If you’re going to buy 50 stocks, just buy the index. You’re creating index-like returns but paying more to do it.

The stock market doesn’t reward complexity—simplify it and take the time to build true conviction. Know what you own and why you own it.

For example, here’s a piece I wrote 2 years ago about 10 stocks to buy for the long term. If you had went out and set up a portfolio with an equal allocation to each of these 10 stocks I suggested, your portfolio would be up almost 100% today.

I REPEAT, IT’S NOT ABOUT COMPLEXITY.

Avoid the Market Gurus.

My biggest red flag in investing? Anyone talking in absolutes.

If someone says, “This will definitely happen,”… run a mile.

I’ve been doing this long enough to know nothing is guaranteed. And the people who try to convince you otherwise? They’re selling you something.

We all have market opinions, and good research can help us estimate probable outcomes. But nobody can predict the future.

The best you can do is structure your portfolio to match your base case market view and diversify enough to protect yourself if (or when) that base case scenario doesn’t play out exactly as planned.

Bottom Line

Cognitively, in all aspects of life, we want to understand why we are doing something. Investing is no different. Once you understand what you are investing in and why, executing on that plan gets a whole lot easier.

Thanks for reading

At FigTree, we help build, monitor and ensure you execute your financial plan. And as trusted advisor we will be there to help you overcome any stumbling block you encounter along the way.

I’m always happy to help wherever I can so if you want to learn more, please don’t hesitate to reach out to me at [email protected]

Mike 👋