Investment Horizon

Every investor wants their assets to increase over time, so they can eventually use that money to buy something or enable them to retire.

Every investor has different motivations for investing. Some of the most common reasons for investing are:

• Retirement
• Beat inflation
• Reach a financial goal like buying a home, starting a business, or funding education
• Reduce taxable income
• Get in early by investing in a start-up company

The investment you choose and how much you attribute to that asset depends primarily on your time horizon. The investment horizon is the total amount of time you expect to hold an asset.

一般来说,老投资者倾向于现金invested in more conservative assets accompanied by less risk. This is because they are more likely to need the money soon, and periods of significant volatility can devastate their portfolios.

年轻人倾向于拥有更长的投资范围，并投资于更风险的投资，以赚取更高的回报。长期的资金使波动性的损失降低了您的投资组合，因为有更多时间从损失中恢复过来。

Your age and the target date of your financial goals affect your investing horizon.

投资视野的类型

You need to consider how long you plan on holding security before investing. Time plays a crucial role in the performance of stocks, bonds, mutual funds, ETFs, and all other types of investments.

地平线有三种一般类型：

1. Short-term
2. Medium-term
3. Long-term

许多投资者将参与所有三个或几次范围。但是，处于生活的不同阶段的个人可能更致力于特定的时间范围。例如，老年人更有可能专注于短期和中期视野。

Typically, the longer the horizon, the more risk you are willing to take because you will likely not require access to your funds anytime soon. However, this is not always the case.

考虑您的时间范围并了解您的风险概况，以确保投资对您的财务状况有意义。但是，当然，随着您的财务状况和年龄的变化，您的时间范围也可以（预期）变化。

1. Short-Term:

Investors with a short-term horizon tend to be older. They are individuals that will likely need the money within five years. This tends to be retirees because they may need the cash to fund their lifestyle when they no longer have a reliable income stream.

This time range could vary from a few hours to five years.

但是，这也可以包括具有短期财务目标的人，例如购买汽车。许多人会将部分储蓄投入到债券或低风险股票上，因为它的收益可能会比传统的储蓄帐户更高。

Examples of short-term goals include:

• 汽车付款
• Wedding
• 间隙年旅行

Short-term investments, while often safer, tend to have lower yields. These types of investments are usually intended to maintain the value of your original investment rather than produce high returns.

Investors in this category tend to be more risk-averse, often reluctant to take on more risk.

Some examples of safer investments for short-term time frames are:

• Money market funds
• 存款证
• Short-term bonds

Liquidity is also necessary with short-term investing to allow easy access to your money.

For instance, let's say you are saving money for a down payment on a car in one year. You know you will need the money, so you want to ensure your investment doesn't lose value. One option could be to put the cash in a short-term certificate of deposit.

This would allow you to earn a higher interest rate on your deposit but with minimized risk. However, you must ensure you will not need to withdraw the money before the maturity date to avoid paying a fee.

An example of asset allocation for the short term is:

• 70% cash
• 20% bonds
• 10% stocks

2. Medium-Term:

Medium time horizons typically mean you do not plan on selling the security for five to ten years. This includes individuals who are less risk-averse and do not have specific long-term plans for their investment.

Examples of medium-term goals include:

• House down payment
• Children's education
• Home Remodel

The length of a financial goal depends on each investor's financial situation, as some may have a higher income or less debt than others, which affects how much someone can contribute to their goal.

中期投资者处于保守和积极进取的中间。结果，他们倾向于将投资组合与股票和债券混合在一起，以提供更高的回报并降低风险。这种证券的组合将保护您免受重大损失。

Additionally, exchange-traded funds (ETFs) can be a valuable asset for medium-term investors because they have the potential for higher returns but come with less risk than stocks.

For instance, let's say you have a child who will need tuition in nine years. With the extended period, you can afford some risk, but you should be cautious because you cannot afford to lose a significant portion of your investment.

One option could be to invest in a mix of stocks and bonds. This asset allocation depends on your target amount and how much risk you can afford.

An example of asset allocation for the medium term is:

• 10% cash
• 40% bonds
• 50％的股票

3.长期：

Long-term investors are more aggressive and not high-risk averse because security is more likely to grow over an extended period. As a result, shorter periods of volatility are often irrelevant over long periods.

The time frame for long-term investing is a horizon longer than ten years. Many people begin saving for retirement early in life. They support this money instead of putting it in a savings account because they will not need access anytime soon.

Examples of long-term goals include:

• Retirement
• Children's education
• Starting a business

While there is often more risk associated with long-term investing, the potential returns are also greater. In addition, long-term investments make sense for young people who can invest cash they will not need soon.

由于复杂性，时间可能是您最大的投资盟友。复合使您的投资能够成倍增长，并且在生命的早期投资可以带来巨大的股息。

An example of asset allocation for the long-term is:

• 90% stocks
• 10% bonds

Risks Associated with Investment Horizons

There is always some risk associated with investing, especially in stocks. Below are a few of the most common threats your investments may be exposed to:

• Inflationary risk refers to the possibility that inflation is higher than the returns on your investments. This causes theactual valueof the asset to decline. Bonds are particularly susceptible to these risks.

• Interest rate risk concerns unexpected changes in interest rates. This is primarily a concern for bonds and other fixed-income securities. This risk can be reduced by holding bonds of various durations.

• Business risk refers to the possibility of a company failing or declaring bankruptcy. This causes your assets to lose value, possibly becoming worthless. The most effective method to reduce exposure to this risk is to maintain a diversified portfolio.
• Like business risk, market risk acknowledges the stock market's volatility. Large-scale events, speculative behavior, and market crashes can all affect the value of your investments.
  这通常是与短期和中期视野更相关的风险，因为在长期以来，投资更有可能增加价值。
• 借款人违约风险的可能性not repay their debts. This is particularly relevant to debt-based securities such as bonds. This risk can be limited by investing in bonds with higher credit ratings.

Example

假设您最近从大学毕业，已经在城市的公寓里住了两年。在二十四岁的时候，您希望与多年的伴侣一起搬到当地郊区的家中。

您已经完成了学生贷款的偿还，但计划在接下来的六个月内购买二手车。您有节省的成本的一半以上，但需要弄清楚从储蓄帐户中投入现金以赚取更多利息。

在这种情况下，购买汽车是短期视野，因此您想寻找保守的东西，但收益率高于当前的储蓄帐户，该帐户仅支付0.75％。因此，您决定将这笔钱投入6个月的存款证明，而APY为1.85％。

接下来，您想在6年内对房屋进行首付，但仍需要产生更多现金。这是一个中期视野，您有更多时间进行风险更高的投资。您不需要很快的钱，也愿意承担一些风险。

您决定将60％的现金投资于Vanguard S＆P 500 ETF（VOO）和Vanguard Rectivend Expriation ETF（VIG）等资金。您会注意到，过去五年来，VOO的历史表现为12.5％和12.4％。

You are comfortable with the safety of these investments and understand there is a slight possibility that the assets will lose value. Therefore, to diversify your portfolio, you also put 30% of your cash into a high-yield bond index, such as the Vanguard High-Yield Corporate Fund (VWEHX).

The remaining 10% of the cash is kept in your traditional savings account as a safety net if you have to renew your lease in a few years because the other securities lost value.

Additionally, you plan to marry your partner soon and understand that the wedding will be expensive. This could be a short- or medium-term goal, depending on when you end up getting married.

Because you are uncertain about when you will get married, you decide to invest 40% in stocks, 30% in bonds, and the remaining 30% in a high-yield savings account.

同时，您已经开始计划退休，因为您是知识渊博的投资者并了解您的投资视野。此外，您还利用了您公司匹配的雇主的401（k）储蓄基金。

You do not plan on retiring for at least thirty-five years, so you devote 90% of your portfolio to stocks to maximize potential returns. Given that you do not need the money anytime soon, you are comfortable with a portfolio of primarily stock risk.

Asset Allocation

Your asset allocation determines how much risk you subject yourself to. For example, investors with long-term horizons are likely to invest more heavily in stocks, while short-term investors often have more bonds.

这是按年龄分配资产分配的建议，但请注意，您的资产分配取决于您的财务状况和投资资料。

Asset Allocation by Age

Age	Stocks	Bonds
0	100%	0%
25	95%	5％
30	90%	10%
35	85%	15％
40	80%	20%
45	75%	25%
50	70%	30%
55	65%	35%
60	60%	40%
65	55%	45%
70	50%	50%
75+	45%	55%

随着年龄的增长，您的投资组合可能需要重新平衡以使您的资产分配与风险承受能力保持一致。

Diversification is the key to providing a balance of potential risk and return. Diversifying your portfolio limits your asset-specific risk, so if one company or sector underperforms, your portfolio doesn't lose all of its value.

Your asset allocation should change as you age and your investment horizon adapts.

Researched and authored by Jackson Hartz|LinkedIn

Reviewed and edited by James Fazeli-Sinaki|LinkedIn

Free Resources

To continue learning and advancing your career, check out these additional helpfulWSOresources:

• Interest Rate Options
• 一月效果
• Junk Bonds
• Large Caps
• LIBOR