Tip No. 3: Match the investment vehicle with your time horizon
|Explore your options. Which ones will be best for you?|
If you already have funds set aside for every goal, consider investments based on the time you want to achieve them. Like, for very short-term goals (say a year or two), you may invest in a vehicle that is not risky or highly speculative. There is no point putting your money in risky investments because you may not be able to liquidate investments when the time comes you will need it.
Short-term to Medium-term to Long-term
Vehicles such as time deposit, managed funds like government securities and money market funds are ideal for short-term goals. For medium-term to long-term goals, you could establish a portfolio depending on the time frame and your tolerance (or appetite) for risk. You may opt to invest in bonds if you are a conservative type of investor or balanced funds that have medium risk and medium returns. You may invest in funds that are initially heavy on ‘high risk, high returns’ investments like stocks (or equity) funds.
Over time, you can transfer your funds to other funds especially as the date approaches when you will need your money. You may transfer your funds to more conservative vehicles to preserve your investment.
Different investment vehicles are intended for your different goals and time horizon. Which ones will be best for you?