You should also build a ‘satellite portfolio’

Investing in life’s goals is a fundamental part of financial planning. At the same time, a ‘satellite portfolio’ can be created for short-term gains.

The ‘Satellite Portfolio’ is designed to generate short-term gains from the stock and commodity markets. Normally, the investment period of such a portfolio is three to six months. Thereafter, investors can follow the method of selling at a profit and reinvesting when the opportunity arises.

Satellite portfolios are designed so that our long-term goals do not affect our financial planning if the long-term portfolio does not achieve the intended results. The Satellite Portfolio is designed to capitalise on market volatility in the short term.

Investors would also be happy to see short-term gains in stocks. But investors need to be prepared to trade in this way.

Technical analysis is required to identify business opportunities. For this you need to learn to analyse technical charts. Professional research reports can be relied upon until you develop the ability to study technical analysis. At the same time, learning and trading technical analysis on your own can be more enjoyable than trading based on other people’s reports.

Special attention should be paid to select fundamentals by studying fundamental analysis along with technical analysis. When there is a strong technical correction in the best stocks, it should be used as an investment opportunity. The investor should also be prepared to wait for a reasonable return on the short-term investment.

Satellite portfolio should not exceed 40 per cent of total investment. For example, if your total portfolio is Rs.50 lakhs, at least Rs.30 lakhs should be set aside for a long-term portfolio with objectives in mind. A maximum of Rs.20 lakhs can be spent on a satellite portfolio. This type of investment arrangement is made to ensure that you are investing for the short term without sacrificing your goals.

When the value of the satellite portfolio exceeds 40 per cent, care should be taken to invest the profit in a bank depot or liquid fund. This will help you increase the value of your long-term portfolio ahead of your goals.