Determine two ways in which knowing one’s investment horizon can help with one’s investment strategy.

Fin320- taxes, inflation – investors and investment “taxes,

Knowing one’s investment horizon can help with one’s investment strategy in two primary ways. By understanding when the funds are going to be spent, it’s easier for you to know how much of a risk is appropriate and how much can be avoided. If an investor is looking at a shorter-term investment horizon, they might opt for more conservative options such as cash equivalents or fixed income rather than riskier equities that could offer higher returns but also greater volatility.

The second way that knowing one’s investment horizon can assist with their strategy is that it allows them to adjust their goals accordingly. If an investor has more time, they can take on greater risks to increase their potential returns while also allowing themselves time to recover any losses. On the other hand, someone with a shorter window of opportunity would need to focus more on preserving capital and not taking excessive chances—something which becomes easier when you have clear objectives laid out beforehand.