Start here: The 3-Bucket System and why I built it

The income investing framework I used to retire from corporate life in 2023 — and what it can do for you.

3-Bucket System

Welcome to Freedom Builder. I’m Rico Nasol — and if you’re coming from YouTube, you already know the gist of what I do. If you’re new here, here’s the short version: I spent 20 years as a creative executive at Netflix and Zappos, building things from nothing. In 2023, I retired from corporate life. Not because I hit some magic number. Because I built a system that generates income whether I work or not.

This newsletter is where I share that system in full. Every week. No fluff, no hype — just what I’m actually doing with my own money and why.

Before anything else, you need to understand the 3-Bucket System. It’s the foundation for everything I talk about here. Once you get it, every ETF, every dividend, every portfolio decision I share will make sense immediately.

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The problem with most income investing advice

Most people approach income investing one of two ways. They either chase yield — buying whatever pays the highest dividend without understanding the risk — or they play it so safe they barely beat inflation. Neither works if your goal is actually building an income stream that replaces your paycheck.

What I needed was a system. Something I could look at every month and know exactly what was working, what wasn’t, and where my next dollar should go.

That’s what the 3-Bucket System is.

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Bucket 1: Safety net (Capital preservation)

This is your foundation. The money in Bucket 1 does not chase yield. It sits in stable, lower-risk positions — Treasury ETFs, high-dividend blue chips, or money market funds — and its only job is to exist when everything else goes sideways.

Think of it as the thing that lets you sleep at night. Without Bucket 1, every market dip feels like a crisis. With it, you have the emotional armor to let Buckets 2 and 3 do their work without panic-selling.

Rule of thumb: Bucket 1 should cover 6-12 months of your essential expenses. If you don’t have that yet, this is where you start — before you touch anything else.

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Bucket 2: Income engine (Cash flow generation)

This is where the income lives. Covered call ETFs, high-yield dividend funds, REITs — positions that are specifically engineered to pay you regularly. This is the bucket most of my YouTube content focuses on because it’s where the most interesting decisions happen.

ULTY, QYLD, AIPI, CONY — these aren’t stocks you buy and forget. They require understanding the strategy behind them: covered calls, premium income, yield sustainability. We’ll go deep on all of these in future issues.

The goal of Bucket 2 is simple: generate monthly income that covers your lifestyle. Not someday. Now, or on a clear path to now.

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Bucket 3: Growth engine (Long-term appreciation)

This is the part most income investors neglect — and it’s where they pay for it later. Bucket 3 is your long-term growth positions. Index funds, growth ETFs, or individual companies you believe in for the long haul. This bucket doesn’t pay you today. It pays your future self.

Without Bucket 3, you’re running a business with no reinvestment. The income feels good until inflation quietly erodes everything you’ve built.

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How the three buckets work together

Here’s what nobody tells you: the buckets aren’t equal. They’re not meant to be. The allocation shifts based on where you are in your journey. Early on, you might be 20% Bucket 1, 40% Bucket 2, 40% Bucket 3. As you get closer to financial independence, that shifts — more weight to income, because that’s what you’re living off.

Every month in this newsletter, I’ll show you my actual allocation, what changed, and why. That’s what paid subscribers get — the full picture, not just the framework.

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What to expect from Freedom Builder

Every Wednesday, you’ll get a new issue. Free subscribers get the frameworks, the concepts, and the ETF education — genuinely useful stuff, not teasers. Paid subscribers get the specifics: my actual positions, monthly income reports, full ETF deep-dives, and the behind-the-scenes decisions I don’t share anywhere else.

If you’ve been watching the YouTube channel, you know I don’t do vague. I don’t do “it depends.” I give you my actual thinking and let you decide what to do with it.

That’s what this newsletter is. Let’s build something real.

“Messy action is better than no action at all.” — If you want the full picture — real positions, real income numbers, real decisions — consider upgrading to a paid subscription. $9/mo. Cancel anytime.