Principles of Investment

1. Time Horizon
   1. Definition and Importance
      1. Explanation of time horizon in investing
      2. Importance in shaping investment decisions
      3. Influence on risk tolerance and asset allocation
   2. Short-term vs. Long-term Investments
      1. Characteristics of Short-term Investments
         1. Duration and typical investment vehicles (e.g., savings accounts, CDs)
         2. Lower risk tolerance
         3. Liquidity preference
         4. Focus on preserving capital
         5. Examples: Treasury bills, money market funds
      2. Characteristics of Long-term Investments
         1. Timeframe definition (typically more than five years)
         2. Higher risk tolerance potential
         3. Growth-oriented
         4. Focus on wealth accumulation
         5. Examples: equities, real estate, index funds
   3. The Impact of Time on Investment Performance
      1. Time-value of Money
         1. Present value and future value concepts
         2. Discounting and compounding explained
      2. Compounding Effect
         1. How returns compound over time
         2. Importance of start investing early to maximize future gains
         3. Real-life examples illustrating long-term compounding benefits
   4. Investment Horizon and Personal Financial Goals
      1. Aligning investment horizon with life events (e.g., retirement, buying a home)
      2. Impact on financial planning and goal setting
      3. Adjusting asset allocation as time horizon changes
   5. Determining and Managing Investment Horizon
      1. Life cycle investing:
         1. Young adulthood: focusing on growth
         2. Middle age: balancing growth and preservation
         3. Retirement: prioritizing income and capital preservation
      2. Factors Influencing Investment Horizon
         1. Personal financial goals and milestones
         2. Economic environment and market dynamics
         3. Individual risk tolerance and preferences
   6. Strategies for Different Time Horizons
      1. Short-term strategy considerations
         1. Priority on liquidity and capital preservation
         2. Hedging strategies to mitigate volatility
      2. Long-term strategy considerations
         1. Emphasis on growth and high return potential
         2. Diversification to spread risk
         3. Dividend reinvestment to enhance growth potential
   7. Adapting to Changes in Time Horizon
      1. Unplanned life events and their impact on investment strategy
      2. Flexibility and the importance of regular portfolio reviews
      3. Adjusting savings rates and asset allocations in response to changes in income or expenses