Transfer gains from satellite to core, but not reverse

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.