Investing Time Horizon
Investment Time Horizon
How long should you hold a stock? That depends on the type of investor you want to be, your investment objectives and your investment horizon.
Tap to watch our video about investing horizon, and read on for more details.
Your investment horizon, also known as investment time horizon, is a total length of time in which you expect to keep your money invested before you cash it in. As an investor, you should understand the amount of risk you’re able to handle and the amount of time you can hold your stocks before selling them for a profit.
In general terms, investment time horizon types vary from short-term to long-term.
- Short-Term Investment Horizon: up to three years. A short-term horizon means that an investor is going to accomplish their goals in the near future: the next day, week, month or year. Short-term investors need to be careful to avoid riskier investments, especially close to maturity, so that they don’t incur significant losses.
- Medium-Term Investment Horizon: 3 to 10 years. Medium-term investors tend to opt for a more conservative mix of high- and low-risk investments in their portfolios.
- Long-Term Investment Horizon: more than 10 years. Long-term investors have more time to make a profit from their investments or compensate for the risks they take when investing. For the same reason, a long-term investor can afford to own a riskier mix of investments compared to a person who needs money within the next few weeks or months.
Tap Next to read more about the specifics of different time horizons in investing.