Your investment ‘Time Horizon’ is the number of years you have planned to achieve a particular financial goal. That goal might be retirement, saving for your education, a down-payment on a house, or a combination of savings objectives. A person may have multiple investment vehicles to account for various financial goals, each with different time horizons. Your investment Time Horizon is unique to your financial situation and your investment objectives. Your time horizon is an important consideration when determining the asset allocation of your overall portfolio.
Generally speaking, investors with longer time horizons can be more aggressive in terms of the amount of risk they take. Options investing is typically more compatible with investors having a longer time horizon and greater ability to take loss short term. Generally speaking, a 30 year old investor who is looking to make a down payment on a house in one year with the funds in their investing account should have a more conservative portfolio compared to an investor who does not need the funds in the near future.
You should consider carefully your time horizon and investing goals prior to investing in options as they can be highly risky, and you can lose all of your invested capital. Options should also be used in relation to your whole investment portfolio.
- Short (Less than 3 Years)
- Average (4-7 Years)
- Long (8 Years+)