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Core Satellite Investment Strategy


The Core Satellite, or some version of it, is a common investment strategy, and in my opinion, it is a productive way to structure one's portfolios. It is simple and easy to implement. In fact, this is where I got the name Core Wealth Consultants, LLC. Here is a summary of one of the ways investors use this strategy.



The Core Satellite Investment Strategy is an approach where the bulk of an investor's portfolio (the "core") is invested in relatively low-risk, diverse assets meant to track the overall market. This is usually done using broad index funds, ETFs, or other diversified investments. The core generally comprises about 60-90% of the portfolio, depending on an investor's risk tolerance and investment horizon. The goal here is to achieve steady, reliable returns that match the market.


The remaining portion of the portfolio, the "satellite", is invested in more aggressive or speculative investments such as individual stocks, sector-specific ETFs, or even alternative investments like real estate or commodities. This part of the portfolio allows for the potential of high returns but also comes with a higher degree of risk. The satellite portion is typically around 10-40% of the portfolio.


One of the main advantages of the Core Satellite Investment Strategy is that it can provide a good balance between risk and return. The core investments provide stability and mitigate the overall risk of the portfolio, while the satellite investments provide the potential for higher returns.


It is also important to remember that this strategy requires regular review and rebalancing. As the value of the core and satellite holdings change over time, the portfolio may drift from its target allocation. Regular rebalancing can help keep the portfolio aligned with the investor's risk tolerance and investment goals.


While there are many ways to implement a Core Satellite Investment Strategy, it's crucial that the chosen approach matches the investor's risk tolerance, investment goals, and time horizon. As with any investment strategy, it's also important to consider the costs and tax implications of the chosen investments.


Overall, the Core Satellite Investment Strategy can be an effective way to balance risk and return, providing the stability of market-indexed investments with the potential for higher returns from more aggressive investments.








DISCLOSURE - All written content on this article is for information purposes only. We utilized ChatGPT and other sources for this article. Opinions expressed herein are solely those of Core Wealth Consultants. Material presented is believed to be from reliable sources, however, we make no representations as to its accuracy or completeness. Core Wealth Consultants, LLC a Registered Investment Advisor in the States of Florida, Indiana and Michigan. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Diversification and asset allocation does not assure or guarantee better performance and cannot eliminate the risk of investment loss.


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