Most investment conversations begin with asset allocation. Stocks versus bonds. Risk tolerance questionnaires. Portfolio models.

But real financial planning does not start with products or percentages. It starts with time, earning capacity, and the recognition that not all money plays the same role in a person’s life. Cash flow is not the starting point, but the outcome of aligning time, goals, and resources.

Treating all wealth as a single pool optimized for one risk profile is a common mistake in long-term planning. Some money must be safe. Some money must grow steadily. Some money can take risk in pursuit of outsized outcomes. Mixing these purposes without structure often leads to poor decisions, especially during periods of stress or transition.

At Prospera, we use a wealth allocation framework that organizes assets by function, not just by asset class.

This approach is inspired in part by Ashvin Chhabra’s work on The Aspirational Investor, particularly the idea that wealth should be segmented according to its role and risk capacity, rather than managed as a single optimized portfolio.

It is also informed by broader financial planning theory, decades of market history, and Prospera’s partners own real-world experience working with executives, founders, and entrepreneurs for more than 20 years across multiple market cycles, industries, and life stages. In practice, this framework has proven especially valuable for individuals with concentrated equity positions, complex compensation structures, or cross-border financial lives, where traditional asset-allocation models often fall short.

The objective is simple: align each portion of wealth with how and when it will be used.

Planning Starts With Time, Goals, and Objectives

Financial planning does not begin with investments or portfolios. It begins with time, and with a clear understanding of goals and objectives.

Time defines the boundaries of the plan:

• How old is the person today?
• How long will they continue earning at their current level?
• When will earnings slow down or stop?
• How long does their wealth need to last?

But time alone is not enough. Planning only becomes meaningful once goals and objectives are clearly defined. What is this wealth meant to support over that time? Lifestyle and spending needs. Flexibility around work. Security and peace of mind. Optionality for career or life changes. In some cases, legacy or multi-generational considerations.

These goals and objectives give structure to the plan. They determine when money is needed, how reliable it needs to be, and how much risk can be tolerated at different stages of life.

Cash flow is the financial expression of those goals over time.

Once objectives are clear, they naturally translate into cash flow. Spending needs today and in the future. Expected income from work, Social Security, pensions, or retirement systems that may come from multiple countries. Gaps between what is earned and what is needed, and when those gaps will occur.

A typical planning horizon might involve someone in their mid-40s who expects to reduce work around age 65, with wealth needing to support life through age 90. That creates a multi-decade timeline with very different cash-flow needs.

At this stage of life, most people experience at least three phases:

• A high-earning phase
• A lower-earning or “semi-retirement” phase
• A fully retired phase, supported by Social Security, pensions, retirement systems, and investment withdrawals

Planning means mapping spending needs and earning capacity across these phases, identifying where gaps will exist, and understanding the timing and reliability required to fill them.

From Goals to Execution: Organizing Starting Assets and Measuring Progress

Once time horizons, goals, and cash-flow needs are understood, the next step is to establish a clear and realistic starting point.

Financial plans do not begin from zero. They begin with the assets a person already owns: cash, taxable investments, retirement accounts, real estate, business interests, concentrated stock positions, and other holdings accumulated over time.

One of the first and most important steps in the planning process is to organize those existing assets into a coherent structure, categorizing them by role, liquidity, risk, and time horizon. This is a step that many individuals find difficult to do on their own, particularly when assets were accumulated opportunistically rather than intentionally.

Understanding the starting asset mix allows planning to move from abstraction to execution.

At the same time, goals and cash-flow requirements imply performance expectations. Future spending needs are not met simply by holding assets, but by allowing those assets to grow appropriately over time. Each objective within a plan carries an implicit return requirement.

For that reason, investments must be evaluated against relevant benchmarks aligned with their role. Growth assumptions are not arbitrary. They are grounded in market-based expectations, historical behavior, and risk levels appropriate to each objective. Importantly, benchmarks differ by bucket. Assets designed for safety are evaluated differently from those intended to compound over time, and differently again from those meant to provide asymmetric upside, where success may be measured by outcomes, liquidity events, or risk reduction rather than index-relative returns.

This step connects planning to accountability. It clarifies how existing assets are expected to contribute to future outcomes, and how progress will be measured along the way.

Only after goals, cash flow, starting assets, and performance expectations are clear does it make sense to design an allocation framework.

The Three “Buckets” of Wealth

With objectives defined, cash flow mapped, starting assets organized, and return expectations understood, the wealth allocation framework becomes practical.

The three buckets exist to organize wealth by purpose, not just by asset class. Each bucket plays a distinct role, over a distinct time frame, with distinct liquidity and risk characteristics.

They provide a structure that allows safety, growth, and opportunity to coexist within a single coherent plan, while also helping prevent emotionally driven decisions during periods of market stress or personal transition.

Bucket One: Safety and Stability

The Foundation

Bucket One is the foundation of the plan.

This bucket exists to provide liquidity, stability, and psychological safety. It holds assets that are low risk, low volatility, and easy to access. Bucket One is not limited to idle cash. It may include a combination of cash, high-quality fixed income, and certain forms of real estate that serve a stability and liquidity function within the overall plan.

Typical assets include:

• Cash and cash equivalents
• High-quality fixed income and Low-risk, liquid investments
• A primary residence
• Real estate in liquid markets that could reasonably be sold within three to six months

The purpose of Bucket One is to:

• Cover unforeseen events such as illness, accidents, or disruptions
• Hold at least six months of fixed, non-discretionary expenses
• Prevent long-term investments from being sold at the wrong time

At the same time, this bucket should not be oversized. Safety comes with lower long-term returns, and holding too much capital here creates opportunity cost.

In practice, Bucket One often represents roughly 30 percent to 50 percent of an allocation, depending on life stage and responsibilities. It is typically the first bucket to be sized and filled.

Bucket Two: Market Growth and Compounding

The Engine

Bucket Two is the engine of the plan.

This bucket holds assets designed to compound over long periods of time. It carries more risk than Bucket One, but it is not speculative.

Typical assets include:

• Equity-heavy portfolios
• A classic 60/40 allocation
• Broad market exposure such as S&P 500 or Nasdaq-style portfolios
• Diversified taxable and retirement accounts

Volatility is expected here, but it is intentional. Money in Bucket Two is meant to be left alone, allowing time and compounding to work.

During accumulation years, a large portion of wealth often sits here. Later in life, this bucket frequently becomes a source of income, with withdrawals around 4 percent, sometimes higher depending on circumstances. It can also act as a flexible buffer during transitions or temporary income disruptions.

If Bucket One provides stability, Bucket Two provides continuity.

Bucket Three: Risk and Asymmetric Upside

The Optionality and Opportunity Bucket

Bucket Three serves a very different role.

This is the high-risk, high-potential bucket. It is not designed for steady compounding, but for asymmetric outcomes, where a smaller allocation may produce a disproportionately large result.

Typical assets include:

• Ownership in startups or private businesses
• RSUs and concentrated stock positions from employers
• Stock options in private companies
• Venture capital and angel investments
• Private equity
• Crypto and other speculative assets

Liquidity varies widely. Some assets may be liquid, while many are illiquid for years. Nothing placed here should be money needed in the short or medium term.

This bucket is not where financial security is built. It is where optionality, opportunity, and upside live.

Typical allocations range from 10 percent to 30 percent of net worth.

Why Founders and Tech Entrepreneurs Are the Exception

Founders and tech entrepreneurs often look very different from traditional investors within this framework.

In many cases, their wealth is created inside Bucket Three. Early-stage equity, concentrated stock positions, and ownership in private companies are not side bets. They are the result of years of work, risk-taking, and value creation.

As a result, it is common for founders and senior tech leaders to have 70 percent to 90 percent of their net worth concentrated in Bucket Three, particularly following a liquidity event or during the period immediately after wealth creation.

This concentration is not inherently a mistake. It is often the reason wealth exists in the first place. However, once wealth has been created, the planning challenge changes. The focus shifts from upside creation to risk management, long-term sustainability, and independence from a single company or outcome. At that stage, diversification and rebalancing into Buckets One and Two become essential. Not to eliminate upside, but to ensure that success translates into durable, long-term financial security.

From Framework to Real-World Application

The three-bucket framework is intentionally simple, but its outcomes are not uniform.

Two people with the same net worth, the same age, and even similar incomes can arrive at very different allocations depending on how their wealth was created, how stable their cash flows are, and what role each dollar needs to play over time.

For founders and tech executives in particular, concentrated positions and asymmetric risk are often a feature of success, not a flaw in planning. For others, stability or long-term compounding may be the dominant objective. The framework does not prescribe a single “correct” allocation. It provides a structure for making trade-offs explicit and intentional.

The personas below are drawn from real-world situations Prospera has worked with over many years, with details simplified and anonymized for illustrative purposes. They reflect common patterns we see among executives, founders, and professionals at different stages of their careers.

The following personas illustrate how the same framework leads to different allocations in practice. Each example reflects a distinct starting point, objective set, and risk profile, while using the same underlying logic to organize safety, growth, and opportunity.

Three Personas, Three Different Allocations

Persona 1: The Stability-First Professional

Age: 48, Senior operations executive. Risk-aware and values predictability.

• Bucket One: approximately 50 percent
• Bucket Two: approximately 40 percent
• Bucket Three: approximately 10 percent

Primary objective: safety, peace of mind, and long-term sustainability.

Persona 2: The Long-Term Compounder

Age: 46, Product director at a large tech company. Disciplined saver with a long time horizon.

• Bucket One: approximately 30 percent
• Bucket Two: approximately 55 to 60 percent
• Bucket Three: approximately 10 to 15 percent

Primary objective: compounding and flexibility over time.

Persona 3: The Concentrated Tech Exec

Age: 49, Senior engineering leader with a large RSU position.

• Bucket One: approximately 10 percent
• Bucket Two: approximately 15 to 20 percent
• Bucket Three: approximately 70 percent

Primary objective: manage concentration risk without eliminating upside.

From Personas to Planning Decisions

While the personas above illustrate how the framework can be applied at a high level, real planning happens in the details. Actual portfolios are shaped by existing assets, tax considerations, timing, liquidity constraints, and personal priorities that cannot be fully captured in an abstract example.

The following case studies show how Prospera applies the same framework in practice, translating structure into specific decisions and sequencing over time.

They demonstrate how the three buckets guide not just allocation, but pacing, trade-offs, and behavior through different life and market conditions.

Case Studies: Applying the Framework

Case Study 1: Rebuilding Confidence Through Stability

Situation: A 48-year-old executive arrived with significant cash and conservative investments, but persistent anxiety about the future.

Approach: Prospera first structured a clearly defined Bucket One, creating visible safety and emergency resilience. With that foundation in place, excess conservatism was gradually redirected into Bucket Two for long-term growth.

Outcome: Greater confidence, improved long-term return potential, and fewer fear-driven decisions.

Case Study 2: Turning Discipline Into Long-Term Freedom

Situation: A 46-year-old tech professional had invested consistently but lacked clarity on when work could realistically scale back.

Approach: Cash-flow modeling identified future income gaps. Bucket One was sized efficiently. Bucket Two became the primary engine, using realistic compounding assumptions and stress-tested withdrawal scenarios.

Outcome: Clear visibility into future flexibility, less portfolio anxiety, and a plan that required less activity rather than more.

Case Study 3: Managing Concentration Without Killing Upside

Situation: A 49-year-old executive had 80 percent of net worth tied to one employer’s stock following years of equity compensation and appreciation.

Approach: Prospera recognized that this concentration was the result of successful wealth creation, not poor planning. Rather than forcing immediate diversification, the process focused on separating roles. Bucket Three was acknowledged as the source of opportunity and upside. A multi-year strategy was implemented to gradually rebalance into Buckets One and Two, prioritizing liquidity, tax efficiency, and long-term income planning.

Outcome: The client reduced single-stock risk over time, built a stronger safety foundation, and created a durable long-term growth engine, while retaining meaningful upside exposure. Wealth shifted from being dependent on one outcome to supporting multiple future paths.

Conclusion

There is no single correct allocation.

What matters is that each portion of wealth is aligned with its purpose, time horizon, liquidity needs, and risk capacity.

The wealth allocation framework provides structure in a world that often feels uncertain. It allows risk to be taken intentionally, safety to be preserved where needed, and long-term growth to compound without unnecessary interference.

Most importantly, it helps individuals move through different phases of life. From wealth creation to wealth preservation. From concentration to balance. From short-term decisions to long-term clarity.

Next Steps

Applying this framework effectively requires personalization. Time horizons differ. Goals evolve. Risk capacity changes. Concentration may increase or decrease depending on career stage and opportunity.

For individuals navigating career transitions, liquidity events, concentrated stock positions, cross-border complexity, or long-term planning decisions, working through this framework in a structured way can create clarity and confidence where uncertainty previously existed.

Prospera works with tech executives, founders, and entrepreneurs to turn these concepts into actionable plans. That process typically includes:

• Clarifying time horizons, goals, and objectives
• Translating those goals into long-term cash-flow planning
• Structuring and sizing each bucket intentionally
• Managing concentration risk and liquidity over time
• Revisiting the framework as life and markets evolve

The framework is not static. It is designed to adapt as circumstances change, while preserving long-term direction and discipline.

If you would like to apply this framework to your own situation, the next step is a conversation.

Prospera works with individuals and families who want a structured, long-term approach to planning and wealth allocation. To discuss how this framework can be applied to your specific goals, timeline, and assets, you can reach out to Prospera to begin that process.

Plan Your Tranquility™

Prospera is a U.S. based registered investment advisory firm (RIA) focused on long-term financial planning and investment management for technology executives, founders, and entrepreneurs. We work with clients navigating concentrated positions, liquidity events, cross-border complexity, and long-term wealth decisions, using disciplined frameworks and a long-term perspective.

info@prospera.investments

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