Investment time horizon is the length of time until the investment is needed to be sold. This is an important concept when trying to decide which type of investment one to add to his/her portfolio. An investor who would not be requiring his/her money for decades can own a riskier portfolio compared to someone who needs the money next week.
The investment time horizon can be called short, medium and long.
- Short term: This time frame is for less than 3 years.
- Medium term: Medium term ranges from 3 years to 10 years.
- Long term: Long term investments last longer than 10 years.
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