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Wealth Building — Know Your Time Horizon
Wealth building is about time in the market, not timing the market
Wealth building is a slow and gradual process that involves a lot of discipline and patience. In fact, discipline and patience are considered to be the greatest qualities for successful investors.
What this means is that once you’ve created a portfolio, you have to set it and forget about it for decades.
Unless you are an experienced trader, actively buying and selling stocks will not produce any remarkable success in the stock market in the long term.
Hence, a key factor in building wealth is to know your time horizon.
Time Horizon definition: Time Horizon is defined simply as the time you would like to stay invested. How long do you want to keep your investments uninterrupted?
Your time horizon depends on your specific needs and your investment goals. Even if you don’t have a long time horizon, if your investment goal is to set aside some funds to pass on to your children or grand children, then you can still be considered as having a long time horizon.
Case Study: Assuming a 10% CAGR (Compound Annual Growth Rate) of the S&P 500, a hypothetical investment of $10,000 in an SP 500 index fund will yield the…
