The Investing Buckets Framework: SCHG, SCHD & QQQI

This week I'm taking my portfolio apart and rebuilding it into separate accounts. Not separate line items inside one account. Actually separate accounts, each one with its own job.

And one of those accounts exists for exactly one reason: so that when I get a bad idea- and I will get a bad idea- that bad idea has somewhere to go that isn't my retirement.

I'll tell you how many accounts in a second. But first I have to tell you what I did last month, because it's the whole reason I'm doing this at all. Last month I sold stock. On purpose. Knowing it would hand me a tax bill I'd spent two years avoiding.

And I'd do it again.

What I Sold and Why

Here's what went. I sold my VOO. I sold Delta. I sold Southern Copper. I sold VGT, and I sold a handful of smaller, higher-risk positions I'd been holding onto for no good reason.

I did it to close on a business purchase. I'm not going to tell you what the business is yet, and I'm not going to pretend it was easy getting the deal done. That was years of compounding, gone in an afternoon. But in my heart, I know I made the right decision.

The Mistake I Knew About for Two Years

Now here's the part that actually matters, and it's the part I got wrong for years.

I've talked about the investing buckets framework before. Bucket one is growth. Bucket two is dividend growth. Bucket three is high income. What I never did was let those buckets be real. They were labels I kept in my head, inside one account, where everything sat next to everything else in one long list.

Here's what I mean. I held VOO and SCHG at the same time, for years. Pull up the overlap on those two: more than half of them are the same companies, weighted roughly the same way. Then I stacked VGT on top of that, which is those same big tech names a third time. So I was buying the same handful of companies three times over, in three different funds, knowing it was not really diversification.

I knew this. I've known it for at least two years. I've talked about it on this channel. And I didn't fix it, because fixing it meant selling appreciated shares and wiring the IRS for the privilege of correcting my own mistake. So I did what most people do. Absolutely nothing. I was up over a hundred percent on many of these positions, so it's not like I was putting myself in a bad position.

Then last month I had to sell anyway to buy a company I'm confident will eventually print money. And the thing I'd been procrastinating on for two years got solved by accident, in the middle of a transaction that had nothing to do with it.

Which is the only reason I'm rebuilding right now instead of a year from now. The tax event already happened. I'm not going to waste it.

The Four-Account Framework

So here's what I'm building this week, and I like to think of this as the advanced investing buckets framework. It requires four accounts.

Three of them do the actual work, and the fourth one needs its own conversation, so I'll come back to it. For the three that matter, the split for new money going in, for me, is roughly forty percent growth, fifty percent dividend growth, ten percent high income. That's where the money goes every Friday. That's not my current portfolio weight, that's the direction I'm pointing new money.

You have a different investing DNA than mine, so your numbers are probably going to be different.

Account One: Growth

SCHG is my anchor. Yours might be VOO or QQQ, and that's totally cool, that's your account and your decision. This is the account I don't touch and don't harvest. No income coming out of it, nothing to manage. It's supposed to be focused on growth for the next fifteen years.

Account Two: Dividend Growth

SCHD is the anchor there, with DGRW alongside it. This is the account that's going to pay me one day. I mean, it pays me today, but when I get this thing where I want it, it's going to pay me.

Dividends reinvest automatically. I don't want to think about it, I don't want to time it. I want it compounding while I'm busy running businesses.

Account Three: High Income

QQQI, SPYI, and JEPQ. These are the highest-yielding things I own and the most expensive funds I own, and both of those facts are true at the same time. I turned reinvestment on for QQQI last month to build the position faster. This account is the smallest of the three on purpose, because I don't need the income today.

How I Actually Fund These Every Week

One question I already know is coming. How do you invest every single week across four accounts without it turning into a part-time job?

I don't split the deposit four ways. Every Friday, the money goes into one account, whichever bucket is furthest behind where I want it to be. Some months that's three Fridays in a row into dividend growth and nothing anywhere else. That's fine. The buckets are a target, not a schedule. I don't want to complicate this.

Now, if you're under forty, you probably only need the first two. Growth and dividend growth. That's it. The third one is a decision for someone closer to needing the money than you are.

I'm not there quite yet, but I'm building the plumbing into my foundation before I need it, because I'd rather have an income machine that's already running when I turn fifty than start building one at fifty-five.

Why Separate Accounts Instead of a Spreadsheet

So why separate accounts instead of just keeping a spreadsheet?

I'm a visual person, and I don't feel like updating a spreadsheet. I can check in on my brokerage app and know exactly where I am. Having separate accounts for each bucket keeps my investments organized based on their purpose.

When growth and income sit in the same account, I catch myself doing math I shouldn't do. Income's up, growth is down; let me just move a little. It's been working, kind of, but why not make it easier on myself?

When they're separate accounts, moving money between them is deliberate. I have to transfer it. I have to mean it.

And it fixes the overlap problem structurally, not just this one time. If growth lives in its own account, the day I add a fund, I can see instantly whether I already own it. VOO and SCHG buried in one long list looked like diversification. VOO and SCHG sitting in an account labeled growth looks like exactly what it is, one bet, doubled.

Here's the part people miss about overlap. It costs you nothing directly. It doesn't show up as a fee or a loss on any statement. It shows up as concentration you might not have known you were making. And when those same ten companies have a bad year, you find out you were two or three times more exposed than you thought you were, and at that point it's not a spreadsheet problem anymore.

Every brokerage I know of will let you open multiple accounts under one login now. It's free, with no minimums, and you can set it up in a few minutes. There's no cost to doing this. The only thing stopping most people is that nobody ever told them it was an option. Myself included.

Account Four: Where Bad Ideas Go

Which brings me to account four. The one I said exists so I can make bad decisions.

It was actually the beginning of the advanced framework idea, because I set this up earlier this year. I trade. Not a lot, but I do it. Short-term ideas, single names I've got a thesis on, the occasional options play, things I'd be a little embarrassed to defend as long-term holdings.

I don't touch crypto, I like assets that produce income, but I am absolutely capable of talking myself into a stock for the wrong reasons at ten o'clock at night.

And honestly, I've already been doing half of this. The speculative stuff has lived in its own account for a while now. In fact, I keep the high-risk stuff in a completely different brokerage.

What I never did was give it a limit. It was separate, but it was separate with no ceiling, which means it wasn't really discipline. It was just a second place to keep making the same mistake.

So that gets its own account. Completely separate. And as of today, it gets one rule. Five percent of my total portfolio. That's the ceiling. Not five percent per trade, five percent total, funded once, and when it's gone, it's gone. No transfers in from the real accounts. Ever.

That's another reason it makes sense to have this with a different brokerage, so I don't transfer between accounts easily. I have enough risk in my life as an entrepreneur, and I need to be able to sleep at night.

Because here's what I've learned about myself in thirty years. I'm not going to stop having bad ideas. Pretending otherwise is how the bad ideas end up in the retirement account, even though I know damn well they're not supposed to.

Take whatever your total invested is. Multiply it by point zero five. Write that number down. That's your entire budget for every bad idea you will ever have. Not this year, total. That's your meme stock money, your hot tip money, your my-guy-at-work-says money. All of it. Forever.

If that number feels too small, that's the point. If it feels about right, open the account this week, fund it once, and let the other ninety-five percent do the actual work.

The Bet I'm Making

The part I haven't figured out yet is what happens in January, when the bill for all of this actually comes due. But that's another post, and honestly, I have a CPA who's going to handle that anyway.

And look, I'm saying all this as a guy who just sold years of compounding to buy something I believe I can grow tenfold. That's a real risk, and I took it at forty-nine, not at fifty-nine. I don't know if I'd make the same call ten years from now. But I'd rather take a step back in the investment account today to build the thing that fills it back up in 2027.

Two steps back. Ten steps forward. That's the bet.

If you read anything else after this, make it the myth I take apart about dividend investing, which is exactly why account two is built the way it is — I laid it all out in my post ranking monthly dividend ETFs. Start there.

Watch the full video above, or on YouTube: https://youtu.be/ob7h2bd-ogw