Mid-Term Financial Planning
INTRUDOCTION
Mid-Term Financial Planning
INTRUDOCTION
An Investment Horizon
Determining an investments horizon, or term, is often based on the intention behind the investment more than the investment itself, such as when the funds will be used for other goals, or whether a lump sum or an income stream is the desired result. The most common terms are generally considered short, medium and long. Though the term does not necessarily denote a specific length of time, most consider anything below 5 years to be short-term; from 5 to 10 years as medium term and anything beyond 10 years to be long term. Since these timeframes are considered flexible, what may be a medium-term investment for one person may feel like a long-term investment to others, and vice versa. An investors risk tolerance is heavily influenced by the term of the investment - and the term of the investment is often decided by what the money will be used for and when. Medium-term goals often look for a balance between risk and return, being more conservative than long-term investments, but more risk tolerant than short-term options (traditional savings accounts, CDs Etc.). Medium-term investments may include various bonds with maturity dates between 5 and 10 years.