Investing comes with many possible strategies. Unknowingly, many people are practicing a core-satellite strategy. This typically consists of broad index funds that can be invested passively (i.e., the core), and a smaller portion of growth stocks and riskier investments (i.e., the satellites). Both require a different level of attention, and an investor should be careful in selecting their portfolio division. In this article, we will look at good strategies for core-satellite and we will see how a stock and crypto portfolio tracker can help to track progress.
Setting Up the Core
The most important element of a core-satellite investment strategy is the selection of the core. It should be a broad index fund that can remain unchanged for more than 20 years. Good examples of such funds are the S&P500 and the MSCi World or Vanguard World. These indexes change based on the market and allow you to have a broad spread across markets and portfolios. This is crucial, as you do not want to change this too often. Do make sure you set a certain percentage for your core division. This allows you to rebalance (e.g., every year) to ensure that the balance remains.
Investing in these Exchange Traded Funds (ETFs) is easy and can be set up automatically through your bank and broker. Hereby you make sure you have periodical investments no matter the state of the market.
Getting Started With the Satellites
Now that you have the core in place, it is time to look at satellites. It is important to note that the division between core and satellite is not set in stone. Naturally, you need to make an educated guess yourself to make this division. For example, if you want to spend more time studying individual stocks, you can consider allocating a larger portion to satellites. If you want to focus less on investing, then make sure the core captures most of your assets.
Selecting Satellites Based on a Strategy
One can easily select a few high-potential stocks and invest in them. However, this is not the way to go. When you start, you need to think about what you invest in. What are the markets you see growing in the mid to short-term? Where do you see potential in terms of technology? Based on this analysis you can create clusters and assign a percentage to them. When that is ready, you can start to invest. Crypto is also typically something you would see as a satellite, with above-market returns with high volatility. As an investor, you need to monitor this more intensely and conduct more trades.
Leveraging a Stock and Crypto Portfolio Tracker
This is also where the stock and crypto portfolio tracker comes into play. In this tool, you can create groups of stocks in portfolios, allowing you to mimic the core and satellite divisions. Next to that, you can see the performance of these portfolios. Only when the satellites outperform the market (i.e., the core) is it viable. Therefore, this should be closely monitored and acted upon accordingly. Advanced trackers allow direct integration with brokers and crypto wallets using the Public Key, this makes it a preferred tool over spreadsheets. There is no more need to add transactions and dividend payments manually!
SUBSCRIBE FOR MORE! HERE'S WHY:
1. You get 7 free books
2. You get the best money & productivity articles
3. You get the latest updates - all in one email per week