Investment Time Horizon
Time horizon typically refers to the time period associated with accomplishing an investment objective. Time horizons can be short term or long (more than 10 years) term. Other constraints such as family situation and liquidity needs can interact with the time horizon to influence portfolio choice.
Since a longer time horizon results in more time to accumulate savings and replenish investment losses, investors with longer time horizons can generally accept a higher level of risk and greater allocation to risky assets, which in turn should contribute to higher expected returns over the entire time horizon. However, specific investor risk tolerance may modify this ability, and multiple time horizons (i.e. saving for both retirement in the long term and buying a home in the short term) also affects the ability to add risk.
For more information, see all articles on: Asset Allocation, FInancial Planning, Portfolio Management See also:
The Intelligent Investor: The Classic Text on Value Investing
Financial Statement Analysis: A Practitioner's Guide, 3rd Edition
Managing Investment Portfolios: A Dynamic Process (CFA Institute Investment Series)
