Time plays a very important role not only in our life but also in scheme selection. Unfortunately, many investors do not have a clear idea when actually they need their money back and that is why they end up buying the wrong scheme always.
After identifying your Financial Goals, the next 3rd step is to fix your Investment time horizon & set priorities. One can divide their goals into 3 groups
- Short Term (1 day - 3 years)
- Medium Term (3 years - 5 years)
- Long Term (> 5 years)
You should be very clear about your financial needs/goals. After defining your investment horizon, the next step is to set priorities from scale #1 to #10 where scale #1 high priority & scale #10 lowest priority. It's equally important to fix the priorities if you have multiple goals which all of us usually have. Start investing for your topmost 5 priority goals first whether it is short-term, medium-term, or long-term.
The time horizon will also indicate you when you should book profit from risky asset class much before you actually need the money in the future.
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