What is a Time Horizon?
Time horizons are simply the duration that the investor anticipates to make use of a given sum of money with a given investment or set of investments. Sometimes referred to as an investment horizon or simply a horizon, the time horizon describes the period that commences at the point of purchase and ends when the purchased option or security is sold. A time horizon can be a matter of seconds or constitute a period that lasts for decades. Setting a time horizon for any investment usually has to do with the goals and aims of the investor. For instance, if the investor is seeking to invest in short term options as a way of financing the purchase of a home in five years, this goal will help to define the perimeters of the investment activity. The investor will actively look for ways to invest money in securities and options that will generate a sufficient return at the end of this five-year period to allow for the purchase of a home within a specified price range. At the same time, a longe
