Investment Horizon

The total length of time that an investor expects to hold a security or portfolio. The investment horizon is used to determine the investor's income needs and desired risk exposure, which is then used to aid in security selection.

As investment horizons increase in length, equities represent a higher risk-adjusted return than fixed-income securities and cash. Across shorter investment horizons, equities become the riskier asset class because they carry higher levels of volatility.

For example, a young professional with a 401(k) plan should be mostly invested in equities because this person's time horizon could be 30 years or more. For someone nearing retirement, however, preservation of capital becomes much more important, so fixed-income investments become more attractive.

Some trading strategies, especially those based on technical analysis, can employ investment horizons of days, hours or even minutes.

Investment dictionary. . 2012.

Look at other dictionaries:

  • Investment Analysis — The study of how an investment is likely to perform and how suitable it is for a given investor. Investment analysis is key to any sound portfolio management strategy. Investors not comfortable doing their own investment analysis can seek… …   Investment dictionary

  • Investment Objective — A client information form used by registered investment advisors and other asset managers that aids in determining the optimal portfolio mix for the client. An investment objective survey may come in the form of a questionnaire, where the… …   Investment dictionary

  • horizon analysis — A less common name for total return analysis. The term horizon analysis derives from the fact that total return analysis requires the user to select an ending date for the investment being analyzed. That ending date is sometimes called the… …   Financial and business terms

  • Horizon analysis — An analysis of returns using total return to assess performance over some investment horizon. The New York Times Financial Glossary …   Financial and business terms

  • Horizon Wind Energy — is a wind energy developer and independent power producer. Horizon has developed wind farms in New York, Iowa, Pennsylvania, Washington, Oklahoma, Minnesota, Oregon, Texas and Illinois. Originally Zilkha Renewable Energy, Horizon was purchased by …   Wikipedia

  • Horizon class frigate — The Horizon Common New Generation Frigate (CNGF) is a multi national collaboration to produce a new generation of anti air warfare frigates. Originally an alliance of Britain, France and Italy, the project is now a French/Italian effort following …   Wikipedia

  • Government Of Singapore Investment Corporation - GIC — A government owned company assigned to manage Singapore s sovereign wealth fund. The GIC was formed in 1981 with the aim to invest the sovereign wealth fund more aggressively in higher yielding asset classes and over a longer investment horizon.… …   Investment dictionary

  • Time Horizon — The length of time over which an investment is made or held before it is liquidated. Time horizons can range from seconds, in the case of a day trader, all the way up to decades for a buy and hold investor. There is no right time frame it depends …   Investment dictionary

  • Prudent Investment — Generally, any use of financial assets that is suitable for the risk and return profile and the time horizon of a given investor. Fiduciaries (such as financial advisors, attorneys, CPAs and retirement plan sponsors) who are entrusted with making …   Investment dictionary

  • Balanced Investment Strategy — A portfolio allocation and management method aimed at balancing risk and return. Such portfolios are generally divided equally between equities and fixed income securities. Although the balanced investment strategy aims to balance risk and return …   Investment dictionary

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.