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Glossary entry · Money in motion
Time horizon
Definition
The length of time you can leave money invested before you need to spend it. The most underrated input in any investment decision — a 30-year horizon and a 3-year horizon should lead to almost opposite portfolios.
Example
Money for retirement in 30 years can ride out crashes. Money for a house deposit in 2 years cannot.
Related
Money in motion
Compound interest
Interest paid not just on what you put in, but on the interest you have already earned.
Read →Inflation
The rate at which the general price of things rises. Same money, less purchasing power.
Read →Interest rate
The percentage something pays — or costs — per year.
Read →Return
The gain (or loss) on an investment, usually expressed as a percentage per year.
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