When investing, it’s important to distinguish between short-term and long-term goals, as this influences the type of investments you should choose.

Short-term goals (1–5 years):

These are goals where you’ll need the money relatively soon, so preserving your capital is crucial. Examples include:

• Saving for a house deposit.
• A large purchase (like a car).
• A wedding or vacation.

For short-term goals, low-risk investments are ideal, such as:

• Cash ISAs: Safe but with low returns.
• Short-term bonds: Offer more stability than stocks.
• Money market funds: Provide liquidity with modest returns.

The focus here is on safety and liquidity rather than high returns, as you want to avoid significant loss right before you need the funds.

Long-term goals (5+ years):

These are goals with a longer time horizon, allowing you to take more risk for potentially higher returns. Examples include:

• Retirement savings.
• Children’s education fund.
• Building long-term wealth.

For long-term goals, higher-risk investments that benefit from compounding, like:

• Stocks: Offer growth potential over time, despite short-term volatility.
• Equity funds or ETFs: Diversified and designed for long-term growth.
• Real estate: Can provide steady appreciation over the years.

The longer time horizon allows you to ride out market fluctuations and benefit from compound growth.

Understanding your goals helps tailor your investment strategy to meet both your short-term needs and long-term aspirations effectively