Why You Should Allocate Your Funds Depending Upon The Time Horizon Of Your Goal.

 

Time horizon is the duration you are willing to hold your investments.The time horizon you choose and the risk of an investment are related and depended  upon the priority of your goal.

    

 

                                         

 Prioritizing your goals is very important depending upon your needs or requirements i.e. which goal is to be achieved in next 3 years or with

in 10 years or beyond that.

Let’s take a look at how Asset Allocation is different for investors with different time horizons to meet their goals.

Short Term Goals	Medium Term Goals	Long Term Goals
Time Horizon
Less than 5 Years	5-10 Years	Beyond 10 Years
Example
Saving for car, vacation	Saving for your child’s education	Saving for your retirement
What to Keep in Mind
Allocate major funds towards fixed income assets and fewer funds in riskier assets	Allocation of Funds to riskier asset classes can be increased to take advantage of higher returns. Mutual Funds which include mix of stocks and bonds are popular investment option	The longer investment horizon the more risk you may generally be able to assume. You can invest funds to aggressive assets to generate higher returns and remove the risk of short term fluctuation.