Let's start with defining the individual components that make up the system.
PUMPS
Think of a pump as a stream of income. The goal here is to have as many as you can. A pump is bringing currency into your life and should essentially do three things:
1) Create value in the market
2) Convert that value into revenue
3) Create, protect and guard your surplus
Example = your business or multiple businesses
BUCKETS
Think of a bucket as a specific asset class you are investing in. A really good bucket should do three things:
1) Store your capital
2) Pay you a yield
3) Get more valuable over time
You may not always be able to check each one of these boxes but this is a good frame of reference to have when you are evaluating an investment decision.
Example = Real Estate, Marketable Securities, Crypto, Investment in companies
MOATS
Think of a moat as your liquidity or cash equivalents. The goal with a moat is to lock down your risk exposure.
Example = Life Insurance, COH, Owning a home outright
HOW THEY WORK TOGETHER
Pumps are filling the system with cash. Every month, we are moving our surplus of capital out of fiat and into buckets. Underneath that, there are layers of moats to defensify the whole system.