How long is a piece of string? Well, the answer is actually simple: as long as you need it to be.
If you have to cut a piece of string, you’ll start with what you need it for. You measure your need and then you cut the string. You don’t work the other way around, otherwise you will waste the string. The same is true for your investment needs.
When approaching an investment plan, or structuring a portfolio of investment products, you need to set goals (investment needs). Tristan Hanson, Head of Asset Allocation at Ashburton Investments (International), says this:
“Firstly, it is important to be clear about time horizon. Loosely speaking, we consider the short term to be anything less than a year, the medium term one to five years, and the long-run anything over five years (although we understand investors’ perspectives on this issue vary).“
Your goals may be fixed by an amount of money or a time period. For example, if you want to save for a holiday, it might be a goal to work towards saving the amount of money needed for the cruise or the plane tickets or the holiday package and you might be flexible on the time needed for this. However, if you’re saving for retirement, you’ll have an ‘ideal’ date in mind. If you’re saving for your children’s education, you’ll have a set date in mind.
Before you start an investment, you must be clear with your planner (and yourself…) how long you want to commit to. This determines which baskets we choose to put your eggs in as the risk profile of your portfolio is directly linked to the time horizon.
Nothing is ever cast in stone, but it’s best to be as prepared as possible in order to be as strategic as necessary! Chat to me and get a great start on your investment portfolio.