Whether you're thinking about purchasing a home, taking a trip, funding college, buying a car, or retirement, you need to be sure you're thinking about it the right way.
Your time frame and risk tolerance will dictate which types of investments are appropriate for you, not your goal itself.
If your time frame is short, the more conservative the investment. The longer the term, investments can often afford to be more aggressive, as short-term losses can be offset by long-term gains.
These types of short-term investments would be most appropriate for you if you’re seeking to:
- Protect your principle
- Eliminate volatility
These types of mid-term investments would be most appropriate for you if you’re seeking to:
- Keep pace with inflation
- Minimize volatility
These types of long-term investments would be most appropriate for you if you’re seeking to:
- Outpace inflation
- Maximize returns
- Generate wealth
Regardless of whether you're planning out your short, mid, or long-term financial goals, it is important to layout a basic time frame map in order to help you visualize what your investments can do for you.