How to Invest for Your Life, Not Just Returns | The Life-Driven Investing Framework Explained

Answer Box: TL;DR

If your investments aren’t mapped to your actual life timeline, you’re not really investing—you’re just hoping. In this video, Dan Pasone explains his Life-Driven Investing (LDI) framework, where portfolios are built backward from your next 1, 5, and 10+ years of real-life cash needs instead of chasing benchmarks. Using four “time bands,” smart asset location, a clear withdrawal playbook, and integrated equity compensation planning, he shows how to fund near-term goals (like a lake house, college, sabbaticals, or phased retirement) while protecting long-term compounding and defending against sequence-of-returns risk.

Key Takeaways

Benchmarks don’t pay for your life. Cash flow does.
- Traditional portfolio management often obsesses over beating an index and uses loose “risk tolerance” quizzes.
- Your real risk isn’t volatility—it’s not having money when you need it.
- Life-Driven Investing links every dollar to a purpose, amount, and date, so your money is there on time.
Risk is personal, not a score from a quiz.
- Dan reframes risk as:
  - Having to sell long-term investments in a downturn to fund short-term needs.
  - Missing commitments like tuition, down payments, or targeted retirement dates.
- LDI is about matching assets to your liabilities and goals, not to an abstract volatility number.
The LDI / TAMI framework: Time Horizon Asset Management Integration.
- Life-Driven Investing borrows from institutional Liability-Driven Investing (LDI) but applies it to families.
- Dan’s process “TAMI” organizes your money into four time bands:
  - Band 1 (0–2 years) – Current needs & emergency fund.
  - Band 2 (3–5 years) – Short-term goals like a lake house or renovations.
  - Band 3 (6–10 years) – Midterm goals like college or phased retirement.
  - Band 4 (10+ years) – Long-term goals like full retirement and legacy.
- Each band gets a different mix of stability vs. growth based on timing and purpose.
How the four time bands typically work.
- Band 1: 0–2 years (current needs)
  - 6–12 months of living expenses, plus a separate emergency fund.
  - Any known big purchases in next 1–2 years.
  - Invested in high-yield savings, money markets, T-bills—“zero drama” money.
- Band 2: 3–5 years (short-term goals)
  - Down payments, major projects, near-term business goals.
  - Uses short/intermediate-term bonds, laddered Treasuries or munis, high-quality credit.
  - Goal: capital preservation with modest income.
- Band 3: 6–10 years (midterm goals)
  - College, phased retirement, big lifestyle shifts.
  - Blend of diversified equity + quality bonds, possibly buffered ETFs for smoother rides.
  - Goal: growth with measured risk because timing is known.
- Band 4: 10+ years (long-term goals)
  - Full retirement, legacy, kids’ inheritance.
  - Heavier allocation to global equity and select alternatives (private equity, private credit, real estate) for appropriate high earners.
Asset location is a huge lever.
- Once time bands are defined, Dan focuses on where assets live:
  - Taxable accounts: cash, short-term holdings, munis for high earners, tax-efficient equity, and possibly alternatives (with awareness of K-1 complexity).
  - Pre-tax (401(k)/traditional IRA): income-heavy investments that would otherwise be taxed at high ordinary rates.
  - Roth accounts: highest-growth, longest-horizon assets to maximize tax-free compounding.
  - HSA: treated like a “medical endowment” with triple tax advantages for healthcare expenses.
Withdrawal strategies are deliberate, not ad hoc.
- Cash-first refill: Spend from the 0–2 year sleeve, refill annually from longer-term bands.
- Tax bracket-aware: Blend taxable and IRA withdrawals to efficiently “fill” tax brackets, layering in QCDs or donor-advised funds for charitably inclined investors.
- Sequence defense mode: In down markets, pause long-term selling and draw from short/intermediate bands; harvest losses and rebalance after recovery.
Everything is managed at the “household level.”
- Dan manages all family accounts as one system, not as isolated silos.
- This allows coordinated risk management, tax-loss harvesting, and rebalancing across the entire portfolio.
Equity compensation must be integrated, not an afterthought.
- For high-earning executives, RSUs, ESPPs, ISOs, and NSOs are often the biggest levers in their plan.
- RSUs: Treated like cash with equity risk. Dan often recommends “sell to cover” at vest, then routing proceeds into specific time bands (e.g., 0–2, 3–5, and long-term buckets) via clear rules.
- ESPP: Consider immediate sales to reduce concentration risk and fund underfilled near-term bands.
- Options (ISOs/NSOs): Coordinate around AMT, use 10b5-1 plans to automate sales and avoid emotional timing, and manage expirations proactively.
Sequence-of-returns risk is real—and planable.
- Two investors with identical average returns can end up with wildly different outcomes if early returns are bad and they’re forced to sell.
- Pre-funding several years of withdrawals in safer sleeves lets you avoid selling long-term assets in deep drawdowns, protecting compounding.
Real-world example: multi-goal household.
- Dan shares a couple (late 40s, ~$900K income, kids 8 and 12) with goals: lake house in 3 years, college in 6 & 10 years, and financial independence in 12.
- Everything originally sat in generic 60/40s. Dan:
  - Funded 0–2 years + emergency fund.
  - Built a short-term band specifically for the lake house.
  - Set college in the midterm band with balanced growth.
  - Kept 10+ year money fully growth-oriented, with some alternatives.
  - Automated RSU sales and routed proceeds into time bands with tax-aware harvesting.
- Result: lake house money is “de-risked,” college on autopilot, and long-term compounding intact.
Life-Driven Investing = clarity, control, and calm.
- Reframes risk from “how volatile is my portfolio?” to “will I meet my commitments?”
- Funds near-term needs, optimizes taxes, and protects long-term compounding by giving every dollar a job, date, and purpose.

Key Moments

(00:00) – Hope vs. plan. Dan opens by contrasting a portfolio tied to your next 1, 5, and 10 years of life with one that just chases benchmarks.
(00:31) – Who this is for. He calls out executives and business owners earning $500K+ with multiple goals and family responsibilities.
(00:50–01:32) – The problem with traditional portfolio management. Dan explains why feelings-based risk questionnaires and benchmark-chasing don’t address your real risks.
(01:32–01:58) – Redefining risk as “money on time.” He reframes risk as failing to have cash when commitments come due.
(01:58–02:23) – From LDI to LDI: Life-Driven vs. Liability-Driven Investing. Dan borrows the institutional LDI concept and repurposes it for families.
(02:23–03:55) – The four time bands (TAMI framework). He walks through Bands 1–4, from immediate needs to long-term goals, and corresponding investment profiles.
(03:55–05:07) – Asset location by account type. Dan explains how taxable, pre-tax, Roth, and HSAs each play distinct roles in the strategy.
(05:07–06:11) – Withdrawal playbooks. He outlines “cash-first refill,” tax bracket-aware withdrawals, and sequence-defense mode.
(06:11–06:31) – Household-level management. Dan emphasizes managing the portfolio at the group level across all family accounts.
(06:31–07:54) – Integrating equity compensation. He details how RSUs, ESPPs, and options fit into the life-driven framework with automation and tax planning.
(07:54–08:48) – Sequence-of-returns risk demo. Dan compares two investors with identical average returns but different return sequences and outcomes.
(08:48–09:09) – How LDI changes the outcome. He shows how pre-funding near-term needs avoids forced selling in down years.
(09:09–10:45) – Jen & Mark case study. Real-life example of mapping multiple goals into time bands and integrating RSUs and charitable strategies.
(11:02–11:52) – Actionable steps. Dan gives a five-step checklist to start mapping your own goals, assets, and rules.
(11:52–12:39) – Big picture & call to action. He summarizes the benefits of life-driven investing and invites viewers to a “wealth clarity” chat and to share their top 3–5 year goals in the comments.

Episode Summary

In this in-depth video, Dan Pasone challenges the traditional, benchmark-obsessed view of investing and replaces it with a framework built around your actual life. He argues that typical portfolio construction—aiming to “beat the index” and relying on loose risk-tolerance questionnaires—misses the real risk that matters: not having money when you need it for specific commitments like tuition, a sabbatical, or being able to step away from work on your terms.

Dan introduces Life-Driven Investing (LDI), an adaptation of institutional Liability-Driven Investing, designed for families. Instead of starting with asset classes, he starts with your goals and organizes them into four time bands: 0–2 years for current needs and emergencies, 3–5 years for shorter-term goals (like a lake house or renovations), 6–10 years for midterm goals (college, phased retirement), and 10+ years for long-term targets (full retirement, legacy, inheritance). Each band has its own investment “personality,” balancing stability and growth based on how soon the dollars are needed.

With time bands defined, Dan focuses on asset location: deciding which investments go into taxable accounts, pre-tax retirement accounts, Roth accounts, and HSAs to maximize tax efficiency and liquidity. For example, he tends to place income-heavy strategies inside pre-tax accounts, high-growth strategies inside Roths, and cash/short-term assets and tax-efficient equity inside taxable accounts. An HSA, when available, can act as a dedicated “medical endowment” with powerful tax advantages.

He then outlines several withdrawal strategies built into the framework. A cash-first refill approach draws from near-term sleeves and replenishes them annually. A tax bracket-aware approach blends taxable and IRA withdrawals to fill tax brackets deliberately and incorporates charitable tools like qualified charitable distributions and donor-advised funds. In down markets, a “sequence defense mode” pauses selling long-term growth assets and instead draws from the short- and intermediate-term bands while harvesting tax losses where possible. Throughout, Dan emphasizes managing the entire family portfolio as a single integrated system, not as isolated accounts.

Recognizing that many of his clients are executives and business owners, Dan shows how equity compensation fits inside this life-driven structure. RSUs are treated like cash with equity risk, often sold at vest with proceeds intentionally routed into underfunded time bands. ESPPs can be harvested to reduce concentration risk and fund short-term goals. Options (ISOs and NSOs) are managed with careful attention to AMT, expiration dates, and automation via 10b5-1 plans. He notes that the difference between ad hoc decisions and a systematic playbook can be worth millions over a career.

To illustrate the importance of planning, Dan demonstrates sequence-of-returns risk: two investors with identical average returns and withdrawal needs, but different return sequences, end up hundreds of thousands of dollars apart simply because one was forced to sell during early downturns. The life-driven approach mitigates this by pre-funding several years of cash needs, ensuring long-term assets can recover before being tapped.

Dan closes with a five-step action list: inventory your 1-, 5-, and 10-year cash needs; price the “cost to access” your money by account and tax treatment; map your current holdings to time bands; define refill rules and rebalancing thresholds; and automate equity comp decisions. He invites viewers to consider a wealth clarity chat at yourtailoredwealth.com to see this mapped out for their own situation, and encourages them to share their top goals for the next 3–5 years so he can respond with how they fit into the time-band framework.

Full Transcript

Dan: If your portfolio isn’t mapped to your next one, five, and ten years of life, it’s not a plan, it’s a hope. Benchmarks don’t pay for college, they don’t fund your lake house, and they definitely don’t cover your sabbatical when you finally decide to downshift. Cash flow does. And today, I’m showing you how we build portfolios from your life backward so that you can actually live your version of a rich life without wondering if your money will be there when you need it.

Dan: I’m Dan Pasone, founder of Tailored Wealth, and we help executives and business owners to optimize wealth, reduce taxes, and build portfolios that actually serve their life goals, not some arbitrary benchmark. And if you’re earning 500K or more with multiple goals and a family that’s counting on you to get this right, this video is for you.

Dan: Here’s what drives me crazy about traditional portfolio management. Most advisers build portfolios to beat a benchmark and use a subjective feelings-based questionnaire to figure out your allocation. “On a scale of one to ten, how do you feel about volatility?”

Dan: Well, here’s the reality. Volatility isn’t your real risk. Your real risk is not having money when you need it. Your real risk is having to sell long-term investments during a downturn because you didn’t plan for short-term needs. Your real risk is failing to meet a commitment, whether it’s your daughter’s college tuition, the down payment on your vacation home, or being able to step away from work on your terms.

Dan: So, let me reframe this for you. Risk is personal. It’s not a score on a risk tolerance quiz. It’s whether your money shows up for you on time for your life.

Dan: This is where life-driven investing, or LDI, comes in. In the institutional world, LDI stands for liability-driven investing, which essentially means endowments and pensions matching assets to future payments. But for families, we reframe it as life-driven investing—matching your assets to the timing, magnitude, and purpose of your future cash needs. We’re not chasing a benchmark. We’re matching your assets to your life.

Dan: And at Tailored Wealth, we call our process TAMI—time horizon asset management integration. It sounds fancy, but it’s actually pretty simple once you see it. Here’s how it works.

Dan: We start with the four time bands that cover your entire financial life.

Dan: Band one, zero to two years: your current needs. This is your cash management sleeve—six to twelve months of living expenses and an emergency fund, plus any upcoming purchases that you know are coming. This money needs to be liquid and stable. Think high-yield savings, money markets, T-bills. Zero drama.

Dan: Band two is three to five years. These are your short-term goals. This is your conservative income sleeve. Maybe it’s your lake house down payment in three years. Maybe it’s a home renovation or funding a future business expansion. We use short- to intermediate-term bonds, laddered Treasuries or munis, and high-quality credit—stuff that won’t blow up when you need it.

Dan: Band three is six to ten years. These are your midterm goals. This is your moderate sleeve—college tuition that starts in six years or maybe a phase retirement where you downshift in eight. Now we can add diversified equity, quality bonds, or maybe buffered ETFs for a smoother ride. We’re growing this money, but we’re not swinging for the fences because we know when we need it.

Dan: Now, band four is your long-term goals. Think ten-plus years. This is your aggressive growth sleeve—full retirement, legacy planning, your kids’ inheritance. This is where we can lean into global equity and, for high earners with long-term time horizons, even select alternatives like private equity, private credit, and real estate.

Dan: Now, here’s the key question that we ask for every single dollar: What’s the cost to access your money? Not just the asset class, but what’s the account type, who owns it, what’s the tax treatment, and what’s the withdrawal schedule? That lens changes everything.

Dan: Once we know your time bands, we get tax smart about where we hold what. This is called asset location, and it’s one of the biggest levers you have.

Dan: Here’s how we typically structure it—and I say “typically” because your situation will be unique.

Dan: Taxable accounts hold cash management and short-term duration stuff for liquidity, muni bonds if you’re in a high tax bracket, a diversified equity core with tax-loss harvesting opportunities, and alternatives if they fit—just make sure you’re aware of K-1s and tax complexity.

Dan: Pre-tax accounts like your 401(k) or traditional IRA—this is where we put income-heavy investments that would create ordinary income if they were held in your taxable accounts. Think core bonds, income sleeves, things you’d least like to pay taxes on each year.

Dan: Now, Roth accounts—this is your highest-growth, longest time horizon bucket. Tax-free compounding for decades. We’re aggressive here because you’ll never pay taxes on the growth. And if you have an HSA, this can be your medical endowment, which is triple tax-advantaged if used for medical expenses.

Dan: Now, the withdrawal strategy. Here we have a few options depending on your situation.

Dan: Option one is the cash-first refill. You spend from your zero- to two-year sleeve, and once a year we refill it from the longer-term sleeves based on your plan.

Dan: Option two is tax bracket-aware. We blend taxable withdrawals with partial IRA distributions to fill your tax bracket efficiently. If you’re charitably inclined, we layer in qualified charitable distributions or donor-advised fund strategies.

Dan: Option three is the sequence defense mode. When the market’s down, we pause long-term sales and we pull from your short and intermediate bands, because that’s what they’re there for. We harvest losses in your taxable accounts to create future tax savings, and when the market recovers, we rebalance everything back.

Dan: And here’s the beauty of our approach. We manage your portfolio at the group level, so all of your family’s accounts are managed together. That means we align risk holistically, harvest tax losses strategically, and rebalance post-withdrawal so that you’re never out of whack.

Dan: Now, if you’re a high-earning executive, you’ve got another layer: equity compensation. RSUs, stock options, employer stock plans—these are often the biggest levers in your financial plan. And yet, most people are winging it.

Dan: Here’s how we integrate equity comp into the life-driven framework.

Dan: RSUs, or restricted stock units—we treat these like cash compensation with equity risk. Sell to cover at vest to handle the taxes automatically, then we route proceeds to your time bands based on your near-term goals. Maybe 40% goes to your zero- to two-year bucket, 30% goes to three to five, and the other 30% gets dollar-cost averaged into your long-term bucket. No emotion, no guessing, just a system.

Dan: ESPP, or employee stock purchase plan—consider immediate sales to diversify and deploy the proceeds to your shortest underfunded band. Concentration risk is real, and company stock doesn’t care about your goals.

Dan: Stock options like ISOs and NSOs—this is where tax planning gets critical. We coordinate around AMT windows for ISOs and use 10b5-1 plans to automate sales and remove emotion, and we manage expiration timelines so you’re not scrambling at the last minute. We’ve helped hundreds of executives navigate these decisions, and the difference between winging it and having a playbook could mean millions over the course of a career.

Dan: Now, let’s talk about the biggest risk that any investor faces: sequence-of-returns risk. Let me show you why this matters with a quick example.

Dan: Meet Investor A and Investor B. Both have two-million-dollar portfolios. Both average seven percent returns over ten years, and both need to withdraw one hundred thousand dollars a year. But the order of their returns is different.

Dan: Investor A experiences returns in this order: down twenty, down ten, up five, up twelve, up fifteen, up eight, up ten, up seven, up six, up eighteen. And Investor B has the exact same returns, just reversed.

Dan: Same average, different sequence. And at year ten, Investor A has eight hundred thousand dollars less than Investor B. Why? Because Investor A was forced to sell assets in years one and two when the market was down—and those dollars never recovered.

Dan: Now, here’s the life-driven difference. Investor B had three to five years pre-funded in conservative sleeves, and when the market tanked in years one and two, they didn’t touch their long-term portfolio. They let it recover. By the time they needed to refill their near-term bands, the market had bounced back. That’s not luck, that’s planning.

Dan: Having near-term liabilities covered reduces forced selling and keeps long-term growth compounding.

Dan: Now, let me bring this to life with a real example. The names are obviously changed for privacy.

Dan: Meet Jen, who’s forty-five, and Mark, who’s forty-seven. Their combined income is roughly nine hundred thousand dollars a year. Mark has RSUs that vest quarterly, and they have two kids, ages eight and twelve. They’re eyeing a lake house in three years. They have college that starts in six and ten years, respectively. And they’d like financial independence by year twelve. This is the classic multi-goal household.

Dan: And when they came to us, everything was in a balanced 60/40 portfolio across all of their accounts. No time horizon mapping, no tax strategy, no equity comp playbook—just a generic allocation.

Dan: So, here’s what we did. We funded their zero- to two-year band with their living expenses plus a healthy emergency fund. We built the short-term band specifically for their lake house and laddered munis and short-term bonds. Then we positioned their six- to ten-year band for college with a mix of diversified equity and bonds, and we kept their ten-year-plus band fully invested for long-term growth with some allocation to alternatives for added diversification and upside.

Dan: And on the RSU side, we automated sales, rerouted cash to different time bands, and harvested losses when available. We also set them up with a donor-advised fund for appreciated shares since they’re charitably inclined.

Dan: The result: the money for the lake house was never at the mercy of a bad quarter, college funding is on autopilot, and they’ve got total clarity on what they can spend today without jeopardizing tomorrow. That’s the calm that comes from life-driven investing.

Dan: All right, let me finish with some actionable steps you can take right now.

Dan: Step one: inventory your next one-, five-, and ten-year cash needs. Get specific. When do you need the money? What is it for? And how much?

Dan: Step two: sort every dollar by when you’ll use it and what’s the cost to access it—account type, tax treatment, account ownership, it all matters.

Dan: Step three is map your current holdings to time bands. Where are your gaps? Are you overfunded in long-term and underfunded in short-term?

Dan: Step four is to set refill rules and drift thresholds for rebalancing. When does a band get topped off, and what’s your tolerance for drift when you rebalance?

Dan: And step five is to automate equity comp decisions where possible—10b5-1 plans, dollar-cost averaging rules, pre-vest routing. Remove the emotion.

Dan: Let’s bring this home. Life-driven investing reframes risk from volatility to failure to meet commitments. It funds your near-term needs so you’re never forced to sell long-term assets, optimizes taxes through smart asset location and withdrawal sequencing, and protects your long-term compounding because your growth sleeve gets to do its job uninterrupted.

Dan: Your investments should have a job description tied to a date and a purpose—not a benchmark. Your life.

Dan: If you want this mapped out for your specific situation, visit yourtailoredwealth.com and see if a wealth clarity chat is right for you. It includes a life-driven portfolio assessment where we’ll walk through your time bands, your tax strategy, and your equity comp.

Dan: And hey, subscribe to the channel and drop a comment below with your top goals for the next three to five years. I read every single one and I’ll reply with how it fits into your bands. I’m Dan Pasone with Tailored Wealth. Thanks for watching, and I’ll see you in the next video.

Resources & Concepts Mentioned

Life-Driven Investing (LDI): A framework that starts with your life goals and timelines, then builds an investment strategy to match.
TAMI (Time Horizon Asset Management Integration): Tailored Wealth’s process for organizing assets across four time bands.
Time Bands: 0–2 years (current needs), 3–5 years (short-term goals), 6–10 years (midterm goals), 10+ years (long-term/legacy).
Asset Location: Placing specific investments in taxable, pre-tax, Roth, and HSA accounts for tax and liquidity efficiency.
Sequence-of-Returns Risk: The risk that poor early returns plus withdrawals permanently damage portfolio longevity.
Equity Compensation: RSUs, ESPPs, ISOs, NSOs, and employer stock strategies integrated into the broader plan.
Donor-Advised Fund (DAF): A charitable giving vehicle useful for appreciated stock and long-term philanthropic planning.

FAQs

What’s the main difference between Life-Driven Investing and traditional investing?

Traditional investing often starts with asset classes and risk scores, then tries to fit your life into that structure. Life-Driven Investing flips that: it starts with your specific goals, timelines, and obligations, then builds portfolios backward from those needs, aligning risk and cash flow to your actual life.

Do I have to be a high earner for this framework to work?

No. While Dan focuses on executives and business owners earning ~$500K+, the core idea—time-banding your goals and matching assets to them—can help at nearly any income level. The complexity (especially around taxes and equity comp) just tends to grow with higher income and net worth.

How many years of expenses should I keep in safer bands?

Dan often uses 0–2 years for immediate needs and emergencies and 3–5 years for short-term goals, but the exact numbers depend on your situation, risk tolerance, job stability, and other income sources. The principle: have enough in conservative bands so you’re not forced to sell long-term assets in a bad market.

Can I apply this if my accounts are scattered across different firms?

Yes—but you’ll need to look at your holdings holistically. Dan’s approach manages everything at the household level across all accounts. Even if your accounts are spread out now, you can map each one into time bands, assign roles, and then decide whether consolidation makes sense.

What if I don’t have equity compensation?

You can still use the full life-driven framework. Equity comp is just one powerful lever for many executives. If you don’t have it, you’ll still benefit from time-banding, asset location, withdrawal strategy, and sequence-of-returns protection.

Disclaimer

This video and written summary are for educational and informational purposes only and do not constitute financial, tax, or legal advice. They do not create a client relationship with Tailored Wealth or any related entity.

Investment strategies, time-banding, tax planning, and equity compensation decisions all involve risks and trade-offs that depend on your specific circumstances. Before making any decisions, you should consult with:

A licensed financial advisor or planner
A qualified tax professional (CPA or EA)
Legal counsel, where appropriate

Any examples mentioned are illustrative only and not guarantees of future outcomes or performance.

Next Steps

List your next 1, 5, and 10+ year goals: Note timing, purpose, and dollar amounts.
Map your current accounts: Taxable, pre-tax, Roth, HSA—what do you own and where?
Assign each goal to a time band: Decide which band funds which goal and check for gaps.
Align investments to time bands: Shift riskier assets to longer horizons and stabilize near-term bands.
Set rules and automate: Define refill thresholds, rebalancing rules, and equity comp automation where applicable.
Consider a professional review: If your situation involves high income, equity comp, or complex taxes, explore a wealth clarity chat with Tailored Wealth.

When every dollar has a purpose, a timeline, and a job description, your portfolio stops being a collection of investments and becomes a strategy for your life.