When choosing an investment, consider factors like your investment horizon, risk tolerance, and market conditions. For example, if you're investing for a short-term goal (like buying a car in the next 2 years), you might want to choose safer, more stable investments like bonds or savings accounts. However, if you're investing for a long-term goal (like retirement in 30 years), you could consider stocks that have the potential for higher returns but come with more risk. Let's break it down: If you invest $1000 in stocks that grow by 8% a year for 30 years, you will have about $10,062 at the end of that period. But if you invest $1000 in bonds at 3% over the same period, you would have about $2,478. Understanding these differences can help you choose the right investments based on your goals.

Investment horizon refers to the length of time you expect to hold an investment before needing to access your money. A longer investment horizon allows you to take more risks and potentially achieve higher returns, while a shorter horizon typically requires more conservative investments to protect your capital.