Now Reading: Transfer gains from satellite to core, but not reverse
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Transfer gains from satellite to core, but not reverse
A financial columnist writing for The Hindu advises investors to transfer gains from a satellite portfolio to a core portfolio if the core faces a shortfall, but never to move money from…
The Story in Brief
A financial columnist writing for The Hindu advises investors to transfer gains from a satellite portfolio to a core portfolio if the core faces a shortfall, but never to move money from core to satellite. The satellite portfolio, which involves active buying and selling of stocks and ETFs, can generate profits and help bridge gaps in goal-based core investments. However, the column warns that market timing depends on luck, and a run of bad luck can wipe out money transferred from a core portfolio. For example, a 50% loss requires a 100% gain to recover, while a 50% gain needs only a 33% dip to disappear. The author also cautions against taking excess returns from a core portfolio to feed the satellite, suggesting instead that such gains be parked in fixed deposits as a buffer against inflation or future shortfalls.
The Indian Opinion
A common narrative is that a satellite portfolio lets you profit from market timing and then top up your core goals. But the column rightly warns against the reverse, raiding a long-term core portfolio to feed the satellite. Luck, not skill, often drives short-term gains, and recovery from losses is far harder than giving up profits. The real test will be whether investors can resist the temptation to shift retirement money into active trading when satellite returns look juicy.
Sources (2): thehindu.com, thehindu.com (2)
This story was synthesised by AI from the 2 sources linked above.
Updated: this story now draws on 2 sources.
