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Glossary · PSX term

Time horizon.

Time horizon is how long you plan to keep money invested before you need it.

Definition

A longer horizon allows you to ride out short-term swings and benefit from compounding, while a short horizon usually calls for safer assets. Matching investments to your horizon reduces the chance of being forced to sell low.

Worked example

Saving for retirement in 25 years allows a longer horizon than saving for a house deposit in two years.

Related on PSX Clarity

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Risk tolerance
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Asset allocation
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Compounding
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Cost averaging

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