Risk and investment horizon: when will you need the money?
AmanaFi team · Updated · 1 min read
The right question before investing is not "how much could it earn" but "when will I need this money". The closer the deadline, the less risk you should take.
Tie each sum to a deadline
List your goals with their dates: emergency fund (immediate), school year (in one year), car (in three years), retirement (in twenty). Each calls for a different kind of placement.
What the horizon allows
A simple table helps decide.
- Under two years: availability and safety of capital.
- Two to five years: caution, with limited swings.
- Over five years: acceptable swings if you can wait.
Know your tolerance
Imagine your investment's value drops 20%: could you wait without panicking or selling? If not, reduce the risky share. A plan you keep beats an ambitious one abandoned in the crisis.
Frequently asked
How do I know if I am taking too much risk?
If a temporary fall would keep you from sleeping or paying your costs, the risky share is too large. Reduce it.
Put it into practice with AmanaFi
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