Investors may often have long-term accumulation and growth as their primary objective for their retirement accounts – but what determines whether a financial goal should be considered long, or short term?

These may seem simple: long term is a ‘long ways’ away, and short is more immediate. It’s more complex than that. And the underlying investments need to match what we call the time-horizon objective. 

For most investors, long-term financial goals are generally retirement accounts, mortgage debt, developing a new business and savings for college of a young child.

Short-term goals may be things like vehicle loan paydown, funding an emergency account, consumer debt paydown, travel expenses, home improvements, and immediate payments like rent and utilities. 

And – savings that could fall into either category may be: paying student loan debt, business debt and saving the down-payment for a house,. 

Time horizons can vary from person-to-person according to income, age, other assets and sometimes market conditions. A high-income earner may have consider saving for the down-payment as a short-term financial goal, while it may take six or seven years for a lower-income earner. 

It’s human nature to focus on the most-immediate needs. If we need money for a down-payment on a car -we’ll often just focus on that and put other goals on the back burner. For success, it’s imperative to prioritize and stick to a plan. Your retirement may be 30-years away – but through financial planning you may learn that your retirement will suffer if you put it on hold while saving for a car.

Work with your Certified Financial Planner to help you develop your plan.

Questions?