Once you have a clearer picture of what you want from your money, you can begin developing the best route to pursue your goals. When will you need the money you are investing? Your time horizon matters a great deal, because fluctuations in the financial markets can affect the short-term value of certain types of investments. If you expect to need a specific amount of money in the near future, you might consider a strategy that involves less risk. On the other hand, if you are saving for retirement and have many years before you need the funds, you may be able to invest for greater growth potential, but this also involves greater risks. Would market declines keep you up at night or cause you to make emotional decisions? Market volatility has tested the resolve of many investors in recent years, reinforcing the fact that risk tolerance is an essential consideration when choosing an investment strategy.
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