What is the Core and Satellite Portfolio Strategy? Is it effective? Should you use it?
The Core and Satellite Portfolio strategy is an asset allocation approach that divides your investments into two distinct parts: Core and Satellite. It combines the benefits of passive and active investment strategies.
Imagine you're building the perfect pizza. You start with a solid base – that's your dough, sauce, and cheese. This foundation is crucial, right? But then comes the fun part: adding toppings that give your pizza that extra zing!
That's exactly how the Core and Satellite strategy works for your investments:
1. The Core: This is your pizza base. It's the largest chunk of your portfolio (usually about 70-80%) and consists of stable, low-risk investments that form the foundation of your wealth.
2. The Satellite: These are your toppings. The remaining 20-30% of your portfolio is allocated to potentially higher-risk, higher-reward investments that aim to boost your overall returns.
Read more about how the core and satellite strategy work practically, the benefits and drawbacks of this strategy, and when you should use this strategy in our blog.
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