How does my time horizon for retirement impact my investment decisions?

Your time horizon for retirement refers to the length of time you have until you retire. It is an important factor to consider when making investment decisions because it affects the amount of risk you can afford to take with your investments.

If you have a longer time horizon, such as 20 or 30 years until retirement, you can afford to take more risk with your investments because you have more time to recover from any losses. This means you may want to consider more aggressive investments, such as stocks, which have higher potential returns but also higher volatility.

On the other hand, if you have a shorter time horizon, such as only a few years until retirement, you may want to take a more conservative approach and focus on investments with lower risk, such as bonds. This is because you have less time to recover from any losses and need to protect your retirement savings.

Overall, it's important to balance risk and reward based on your time horizon, risk tolerance, and financial goals to create an investment portfolio that is appropriate for your individual needs.