At Tradewinds Capital Management we counsel our clients to determine and designate the appropriate time horizon for the investments in each account within the following parameters:
2 Years or Less
3 Years to 5 Years
6 Years to 10 Years
11 Years to 14 Years
15 Years or Longer
The proper time horizon is based upon the period in which a client expects to utilize the principal of the account. If a client is planning on utilizing a significant percentage of the account for a major purchase (example: car) or investment (example: home or land) then a shorter time horizon would be utilized based upon the planned purchase period. If a client is planning on utilizing small percentage withdrawals over time (example: 4% of the account as retirement income) then a client’s time horizon would be extended further into the future. Larger planned withdrawals are indications of a shorter time horizon, smaller or no planned withdrawals are indications of a longer time horizon.
For the purpose of planning, the time horizon for a given account is paramount for the selection of an appropriate risk profile and investment plan.