The length of time over which one anticipates holding an investment to achieve a particular objective is known as the investment time horizon. Sukuks (less risky) and stocks (riskier), which carry higher risk, make up the two primary kinds of investments. The more aggressive or riskier a portfolio an investor can create, the longer the time horizon.

Usually, when we talk about risk in this context, we’re talking about stock market exposure through individual stocks or equity mutual funds. A longer time horizon gives the portfolio more time to recover if the stock market declines.

It is important when creating an investment plan or strategy that you consider your goals, attitude to risk, and how long it will take to achieve these goals. The more time to have the more risks you can take because should markets go down you will have time to allow your portfolio of investments to recover. 

What are the different time horizons or terms?

  • Short-term objectives are often ones that are fewer than five years away.
  • Medium-term goals are five to ten years from now and are intermediate-term ambitions.
  • Long-term goals with a time frame of more than 10 years are considered long-term.

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