Why a Core-Satellite Strategy Is Perfect for a Combination of Stock and Crypto
There are many investment strategies used by retail investors. One of the most common strategies is known as core-satellite. Although the terminology is not used by many, it is a strategy that many pursue without knowing. With the emergence of crypto, we see the potential for people to leverage this strategy to enter the crypto domain. It can help make a strong investment strategy for both stocks and crypto, which can be monitored using a stock and crypto tracker.
What Does Core-Satellite Investing Mean
When it comes to core-satellites, it revolves around having a strong core with a set of satellites surrounding it. Similar to having a planet with satellites floating around it. Depending on your risk appetite, you can determine the balance between the core and satellites, and how you define your satellites.
When it comes to the core, it is the majority of the capital invested. This happens using a diversified set of investments, typically through Exchange Traded Funds (ETFs). For example, investors use an ETF to track the S&P 500 or the MSCi World. These funds are very diversified, touching almost every industry and market. This enables you to spread risk, having exposure across the board. The idea of the core is to invest in it periodically and there is no need to change it: you can keep it over long time horizons.
Satellites are very different from the core, as they are riskier of nature. The amount of risk one wants to take is dependent on the individual. There are many approaches to executing on satellites. For example, a satellite can be technology growth stocks or upcoming biomedical companies. Another option is cryptocurrencies, where you can also split them up even further. You can pair the established currencies (e.g., Bitcoin and Ethereum) and create a separate satellite for the emerging coins.
Since the returns and risk levels are different, it helps to cluster them as a satellite. Based on your defined strategy, you can determine how many satellites you prefer and how often you change course.
How Can Tracker Technology Help You in This Strategy
A cryptocurrency tracker can help you to have insight into your crypto portfolio. You can cluster the coins in portfolios, allowing you to replicate the satellites inside the tracker. This allows you to immediately validate if your strategy is on-track, and continuously monitor its progress.
Naturally, if you are investing in different asset classes, you prefer to have both stock and crypto tracker capabilities. This is possible through specific tracking applications such as Delta. By creating portfolios inside the tracker, you can have a good overview of your core-satellite strategy. Once in place, you can set up notifications when major price changes or news occur. This allows you to become more passive in investing, while you can still act upon major changes that happen in satellites. As these are more volatile, you want to keep a closer eye on those and act faster.