Time horizon

Lesson 3 of 12 in our free Investing Basics guide: a 5-minute money game with the key points below.

This lesson is in the full version.

Free with a code from your uni, college, council, landlord or employer (worth £600/year). Lesson 1 of Investing Basics is free for everyone.

Questions you'll answer

Mo needs £2,000 in 8 months for a placement deposit. Where does it make most sense?

Festival tickets next summer → Short (under 2 yrs). Short — keep it in cash.
A car in about 3 years → Medium (2–5 yrs). Medium — mostly cash, as a fall could hurt your plans.
Retirement → Long (5+ yrs). Long — decades of time to recover from dips.
A deposit for a home in 10 years → Long (5+ yrs). Long — though as the date gets closer, risk usually gets dialled down.
Fact: “Over long periods, a diversified spread of shares has historically tended to grow more than cash — but with bumpy years.” — Historically true over long periods, with big dips along the way. Not a promise for the future.
Myth: “Investing short term is a reliable way to grow money fast.” — Short term, prices can move a lot either way. Time is what smooths out the bumps.
Fact: “As a goal gets close, people often move to lower-risk options.” — So a late market dip can't wreck the plan.