Your time horizon is the length of time you expect to invest your money for. It's a key consideration when choosing investments.
Here are 3 sample time horizons and some investments that might be appropriate for each one.
|Time horizon||What to keep in mind||Investments that may work for you|
Less than 5 years
Examples: saving for a car, vacation or down payment on a home
You want your money to grow, but if you get poor results, you won’t have time to make back your losses.
Consider lower-risk investments that are easy to turn into cash.
|Between 5 and 10 years|
Examples: saving for your child’s education or a second property
|You want your money to grow and you know you have a few years before you’ll need it.|
Consider some investments with more growth potential and a moderate level of risk.
|More than 10 years away||You know you have many years before you’ll need the cash. If you have losses, you have time to make them up. At the same time, this money is important for the future. You likely don’t want to take on too much risk.|
Consider some investments with medium to high growth potential and a moderate to higher level of risk.
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