Determining Your Time Horizon
Your time horizon is the number of years that you have to invest before you
retire, as well as the number of years that you expect to live in
retirement. For example, at 30 years old you should anticipate an
investment time frame of 50 to 60 years or more, because your life
expectancy is likely to be 80 years or more. And, if you plan to leave a
portion of your retirement savings to your heirs, your time horizon will
extend well beyond your life span.
Keep in mind:
- The longer the time until you will need the money, the more time you have to
weather the markets' periodic swings. As a result, the longer your time
horizon, the more aggressively you can consider investing.
- As you approach your goal, your portfolio has less time to recover from
market dips, so you might wish to gradually shift to a more conservative
asset allocation.
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