Definition of 'Investment Objective'
There are two main types of investment objectives:
* **Short-term objectives** are those that you want to achieve within the next few years, such as saving for a down payment on a house or paying for college.
* **Long-term objectives** are those that you want to achieve more than five years in the future, such as retirement or building wealth.
When you're setting your investment objectives, it's important to be realistic about your financial situation and your risk tolerance. If you're not sure what your risk tolerance is, you can take a risk assessment quiz to help you figure it out.
Once you know your risk tolerance, you can start to choose investments that are appropriate for your goals. For example, if you have a short-term objective, you'll want to choose investments that are less risky and have a lower potential return. If you have a long-term objective, you can afford to take on more risk in exchange for a higher potential return.
It's also important to remember that your investment objectives may change over time. For example, you may decide to change your retirement date or you may have a child and need to start saving for their college education. If your investment objectives change, you'll need to adjust your investments accordingly.
By understanding your investment objectives, you can make better investment decisions that will help you reach your financial goals.
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