What Is Time Horizon Investing? - YouTube

what is time horizon and how  does it change my outlook  

what is time horizon and how does it change okay  so i'm assuming that means with investing right so  

if i look at investing this is this is really  fascinating because this comes up all the time  

uh you kind of need to understand what has  happened historically with the stock market  

to understand how much time horizon can  impact what you're thinking about doing  

so if you look at say the worst one year that's  happened you know let's say since 1970s early 70s  

in the total stock market itself it was  down about 43 percent yep so if you come  

to me and say hey you know i want to buy  a house in a year and what what what stock  

should i buy or you know what portfolio should  i have uh the answer is you shouldn't have any  

at all you should put that into your bank  account cds something that's guaranteed now  

the best rate of return for a one year period the  market was up 66 percent so you could get lucky  

you could put money in roll the dice and hope that  that gain comes through right yeah and the market  

does go up more than it goes down so i think you  have a slightly higher chance of getting lucky  

than unlucky but my answer there would be that you  shouldn't invest for that short of a time horizon  

the worst tenure right rate of return was down  two and a half percent and there hasn't been  

a 12-year period uh at least since the early 70s  where you didn't have a positive rate of return so  

longer term outlooks for stock market mixtures is  much much easier to accomplish what you're trying  

to do which is grow your assets than shorter term  concepts and i've run into a lot of people have a  

lot of misconceptions about that you know and i've  seen an awful lot of people with short-term goals  

rolling the dice uh and obviously didn't work  this year i worked in 2020 yeah uh worked in 2021  

actually is not working in 2022 so really take a  look at the time horizon that you have for your  

investments and consider what you're trying to do  there either you know stick with the investments  

and change your time horizon like hey this money  i was saving for my house and it's in the market  

it's down now right now maybe i'll just use that  for retirement or something long term yeah i'll  

keep adding a little bit to it and i'll build up  the house money somewhere else usually it's hard  

to do that because houses are so expensive  right it takes so much capital to do that  

or you just you know get out of it and and yeah  you know maybe you change the time horizon where  

you're going to buy a house right wait till the  market comes back around continue i mean if you're  

one still a gamble but it's i guess it's sort of  a middle line right you can continue to buy right  

i'm gonna buy and okay maybe i don't buy a house  at the end of this year maybe it's two years from  

now okay fine i'm gonna keep on buying because  i'm already in i've already lost money i'm going  

to keep going so you know different strategies  but if you're starting off and you were to ask  

me about time horizon that's what you'll find all  financial planners and advisors that's one of the  

first questions we have as well how long you know  how long do you have before you need the money  

because it denotes what you should do with that  money because essentially you're playing a game  

of probabilities and so i would be really careful  for short timelines you know getting involved with  

the stock market personally yeah and so that's  why it's important if you're you know looking out  

for retirement or in retirement you want to have  something that has you know some sort of equity  

or stock portion because you need your money to  keep growing and so if you have 15 20 years it's  

likely that you're going to have a positive return  and so that's why you want to be in the market