In the previous column, we discussed the benefits of creating and managing a satellite portfolio; you can use the gains from the satellite portfolio to bridge a shortfall in any of the core portfolios. What if there is no shortfall and the satellite portfolio is generating handsome gains? Here, we discuss why you should not transfer money from the core to the satellite portfolio.Market timingIf you pursue three life goals, you should have three core portfolios. The portfolio with the longest time horizon will be a retirement portfolio to accumulate wealth to meet post-retirement expenses. When the satellite portfolio is generating handsome gains, you may be tempted to raise trading capital by transferring money from your retirement portfolio. The argument could be retirement is far away and you can bridge any shortfall during the last 10 years of working life. There are, however, two factors to be mindful of.Market timing, skill, luckOne, the satellite portfolio is about market timing involving skill and luck. If you have a period of bad luck, you could lose a huge part of the money transferred from the core to the satellite portfolio. Recovering losses is more difficult than giving up gains of the same magnitude. For instance, 50% unrealised losses require 100% appreciation in value to recover the loss but 50% unrealised gains require only a 33% dip to wipe out the gains. Two, if you are tempted to transfer excess returns in any core portfolio to the satellite portfolio, think about this.Suppose you expect a 12% pre-tax return on an equity investment in a child’s education portfolio. If the investment were to experience 14% return, it would be optimal to take out the excess returns of two percentage points and create a fixed deposit.The deposit can be used as capital when actual return on equity investments in any year is less than 12% during the remaining time horizon for the goal.ConclusionYou can transfer gains from your satellite to a core portfolio but not the other way around. This constraint is important to protect excess gains you may have in any of your core portfolios. Such gains can also be used as buffer capital to account for inflation risk, as the amount needed to achieve the goal can increase because of inflation.(The author offers training programmes for individuals to manage their personal investments.)Published on August 9, 2026