Not many of us give it a thought and rarely is it of concern to most when planning an investment. But, whether it is a small investment you are making or a huge one you must know your Investment horizon before you take the plunge.
But what is Investment horizon all about?
Investment horizon is the time period you would like your investments to stay put. This could be short or long depending on your goals, your age, your risk profile, liquidity requirement.
Are you around 25 years? You can afford to try high-risk category investments at this juncture. Growth funds equities are for you. Higher the risk higher will be the returns. Besides equities outperform other investments in the long run. Opt for a long-term investment horizon.
Are you around 35 years? What are your objectives? Are you looking at a moderate investment horizon of around 3-5 years? Consider mutual funds. If you would like to try your luck with equities pick some diversified equity funds and for the safety factor bonds and postal savings would do.
Nearing retirement? Forget equities now. You may have already gained handsomely from equities in the past. Considering anymore risk is not recommended. Pension plans, PPF, annuities, pure debt are your bet.