Wealth creation is an important aspect of financial freedom, but another equally important aspect is asset allocation. There is no point in earning a lot of money and losing a lot of money. Most of the best stock traders in the world only win half of the time. What makes them successful is that they have the right asset allocation.

Asset allocation is a concept I learnt from Tony Robbins. It’s a simple device that you can use to protect some of your profits, while letting some of your other money grow at an exponential rate.

Asset allocation works on three buckets, namely:

  • Security
  • Growth
  • Dream


The security bucket consists of investments that are safe and secure. Things like pension or insurance funds. This bucket needs a constant flow of monthly income and is something that you do not touch until you have reached retirement. This bucket can guarantee financial freedom, but it will take a long time.

Examples of this bucket are tax-free savings account, bond savings, bank savings and pension funds.

Currently my security bucket contains 40% of my wealth. Your percentage split will depend on your age and risk appetite. Seeing that I’m only 30, I feel confident that I can invest most of my money into the growth bucket and still have time to recover in case something goes wrong.

A friend of mine’s dad, who recently turned 70, is investing 75% of his wealth into a secure vehicle. That makes sense because he won’t be able to recover easily if something goes wrong. Your asset allocation percentage is a personal choice and requires you to carefully consider your age, risk profile and desire for growth.


The growth bucket are investments that are focused on growth. This would be things like property, stocks, indexes, your own business… these investments have a higher risk profile, but also a higher chance of reward.

Currently my growth bucket accounts for 60% of my wealth. Again, this is a high percentage, but it’s because I feel confident that at my age, I will be able to work back any financial disaster. Depending on your age, you need to determine what your asset allocation will be and stick to it. You must review your finances/assets every year and determine where your allocation is. If you have an unbalanced portfolio, then adjust and ensure that you have enough growth and protection in your portfolio.


The dream bucket consists of the pleasures you desire in life. Whether it is taking your dad on a golfing trip around Argentina or just wanting a simple relaxed holiday at your local beach resort. Whenever you make a big profit in your growth bucket, take a third of the profits and invest in your dream bucket. There is no point in making a lot of money and never enjoying it.

First you need to make money, then allocate it correctly and then, when you achieve a surplus in income, use that to enjoy your life a little. Jot down some dreams that you have and allocate a cost to each dream. Once you have your dreams, you can allocate your profits to that dream and once you have saved enough, spoil yourself for a job well done.

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