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Finance Terms 101: Time Horizon

What is Time Horizon?

When it comes to financing many people think they know what they are talking about but when it comes down to terminology a lot of people don’t know as much as they think. So, to start off with some personal finance terminology we want to know what is a time horizon?

Well, to answer that question, your time horizon when it comes to investing is really important because the timer horizon is really how much time do you have until you need the money.

timehorizon

If you’re retiring in 10 years then you might have a ten-year time horizon or if you want to buy a new car in 7 years then you have a seven-year time horizon. This is a great way to determine when you should be investing and when you shouldn’t be investing. If your retiring next year and you only have a one-year time horizon and all your money is in the stock market and the stocks do poorly you can really be in a challenge.

Especially when the markets do bad right before your ready to pull out. So, making sure you have a clear idea of your time horizon, you should begin to learn it as it is critical for making financial decision. For more check out the video.