Part 15: Investment Horizon

Welcome back to The Apricot Investor’s Glossary! Today, we’ll explore a crucial concept that applies to all investments: your investment horizon.

What is an Investment Horizon?

Simply put, your investment horizon is the length of time you plan to hold an investment before you need the money back. Think of investing like planning a garden.  Depending on how soon you need to “harvest” the fruits of your labor, your choice of plants and overall gardening strategy will change accordingly.  Therefore, your investment horizon determines how long you can hold your investments before you need them to bear fruit.

Why Does it Matter?

Your investment horizon plays a major role in determining:

• The risk tolerance: If an investor has a long investment horizon (e.g., saving for retirement decades away), he/she can generally take on more risk. This is because the investor has more time to recover from potential market fluctuations. In contrast, a short horizon (e.g., saving for a down payment on a house in a few years) usually calls for a more conservative approach.
• The investment choices: A longer horizon might allow the investor to invest in assets with higher growth potential, like stocks. A shorter horizon might lead him/her towards more stable, lower-risk instruments like bonds.

Examples of Investment Horizons

Several factors can influence your investment horizon. For example, younger investors typically have longer horizons, while those saving for a short-term goal will have a shorter horizon than someone saving for retirement. Major life events like marriage, having children, or career shifts can also impact your investment horizon.

Understanding your investment horizon is essential for making informed investment decisions. 

It’s important to remember that investments are subject to market fluctuations and carry inherent risks. Consider your financial goals and risk tolerance before investing.

Apricot Capital is regulated by the Central Bank of Armenia.

The examples in this text are for illustrative purposes only. This does not constitute investment advice or a recommendation to buy or sell any specific investment instrument. The past performance mentioned in this text is not indicative of future results.