3 Portfolios for Wealthy Families to Consider

Matt Corthell, CFA, President and CEO |

There is no one-size approach that fits all families but looking at your portfolio in 3 buckets can be helpful to determine an asset allocation that is correct for your situation. The 3 buckets to consider are: Emergency Reserves, Core Portfolio and Surplus Portfolio.

Emergency Reserve

This is just as it sounds. While it is suitable for most people to have a 3-6 month of spending as a cushion, as you near or enter retirement, it can be helpful both structurally and emotionally to build an emergency to 1, 2 or sometimes 3 years’ worth of spending. Suitable investments for this type of portfolio can be a high-yield savings, CDs, Money Market or our WC Managed Cash portfolio.

Core Portfolio

This is your traditional portfolio which may be comprised of stocks, bonds, real estate or other investable assets. This generally will do the heavy lifting in retirement for accessing funds. Going through a financial plan and determining the right amount needed in this portfolio is crucial for the next step. It’s important that a core portfolio have a reasonable chance of getting you through retirement using conservative assumptions and significant stress tests while funding the lifestyle you are looking for in retirement.

Surplus Portfolio

This is any amount that is in excess of your Emergency and Core Portfolio. By definition, it is money not needed to achieve your goals. By defining your Surplus Portfolio, you can better evaluate the true risk should you have a situation like some of the following examples:

  • You’re an executive at a company with a concentrated position in company stock

  • You’re a small business owner and have a significant portion of your net worth tied up in the business

  • You happened to pick a stock years ago and it went on to be a huge winner and a large portion of your net worth.

When you have your core needs covered, the Surplus Portfolio can allow you to take on a more aggressive portfolio. This ultimately can be used for larger charitable or family gifts, inheritances or whatever else aligns with your funds.

Say you own a small business in retirement, if your Core and Emergency Portfolios are funded the concentrated position can be allocated to the Surplus Portfolio meaning that should the business fail, you aren’t likely to jeopardize your ability to retire. That is very important in determining the risks you are actually taking. Conversely, if that same person had no surplus and half of their Core Portfolio made up of the small business, that could spell trouble should the business fall on hard times.

Closing Thoughts

Your income is your greatest wealth building tool. If you are still looking to build your wealth to the point of having a surplus portfolio, growing and properly allocating your income is generally the best way to get there.

Feel free to schedule a meeting with one of our advisors to learn how your portfolio can be used to fund your goals.


This commentary reflects the personal opinions, viewpoints, and analyses of Wooster Corthell Wealth Management, Inc. “WCWMI” employees. The information presented should not be viewed as a comprehensive analysis of the topics discussed but instead is general in nature.

The views reflected in the commentary are subject to change at any time without notice. WCWMI makes no representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information presented.

This commentary may contain information that might assist you in the development of subsequent discussions with the appropriate professionals and should not be construed as tax planning, estate planning or insurance advice. Neither WCWMI nor its employees are accountants, attorneys, or insurance agents. Therefore, please consult your tax professional, attorney, and/or insurance agent regarding your specific situation.

Wooster Corthell Wealth Management, Inc. has been an Investment Adviser registered with the Securities and Exchange Commission since 2001. Registration does not imply any level of skill or training. Additional information about us is available on the SEC's website at www.adviserinfo.sec.gov.