What can cause a changing time horizon for investors?

A changing time horizon for investors is often influenced by the passage of time and future liabilities. As investors age or experience significant life events—such as approaching retirement, having children, or buying a home—their financial needs and priorities evolve. For instance, a younger investor might have a longer time horizon to invest for growth, while an investor nearing retirement will likely need to shift their focus towards capital preservation and generating income, which necessitates a shorter time horizon.

This change is essential as it aligns the investment strategy with the investor’s personal financial goals, risk tolerance, and the need for liquidity associated with future liabilities. Such events help dictate not just how long an investor plans to hold onto assets, but also the type of investments that are appropriate, ultimately influencing overall portfolio management.