Your investment horizon is the total length of time that you expect to hold an investment before taking the money out. Knowing your investment horizon helps in choosing the right type of investments. For example, if you plan to invest for 10 years, you might consider stocks that have higher potential returns over the long term. If you need the money in 1 year, you might choose safer options like cash or short-term bonds. Here's a simplified breakdown: - If you invest $1,000 in a stock that grows at an average of 7% per year over 10 years, you would have about $1,967 by the end of that period (calculated using the formula FV = PV * (1 + r)^n, where FV is future value, PV is present value, r is rate of return, and n is the number of years). - If you need the money in 1 year with a conservative bond that returns around 1%, you'd only have $1,010 by that time. The longer you can stay invested, the more you can take advantage of growth potential.

Investment horizon is the time frame you expect to hold an investment before needing the money. It influences your investment choices; longer horizons may allow for higher-risk, potentially higher-return investments, while shorter horizons typically favor more stable, lower-risk options.