Time Horizon
The period before an investor needs to draw on the money invested.
Formula
Test: the date at which the capital, or a stated portion of it, must be available for spending
Unit
years
In depth
Horizon determines almost everything else about a portfolio, because it determines whether volatility is survivable — a fall that is an inconvenience over twenty years is a disaster over eighteen months. It should be assessed honestly against actual obligations rather than aspirationally, since the horizon that matters is when the money is genuinely needed, not when it is hoped to be needed. Investors routinely overstate their horizon and then discover the true one during a crash. A portfolio with several goals has several horizons and is better managed as separate buckets than as one blended average.
Worked example
Money needed for a purchase in eighteen months has an eighteen-month horizon regardless of the investor's age. In equity, a 35% fall six months before the date is not recoverable by patience, because the patience is not available.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Time Horizon” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.