How to invest for short-term vs. long-term goals
You may want to implement a planned home improvement project in the near future while also saving for your eventual retirement


Investing is generally agreed upon as a staple for building wealth. But for it to dovetail with your personal financial goals, there is more finesse required than simply picking a promising opportunity to put your money into.
Alongside your tolerance for taking on risk, another major consideration when investing is what is known as your time horizon, or the amount of time in which "you will need to access your money," said Investopedia. If you are like most people, you probably have a mix of goals coming up sooner, such as a planned home improvement project, in addition to those that are a while down the road, like saving for eventual retirement. While investing can be key to meeting both of these aims, the approach you take will likely be different.
Why does your timeline matter when investing?
Above all else, "your investing time horizon will help determine what you invest in and how," said The Motley Fool. That is because the "risks you take with your money depend greatly on how much time remains for your portfolio to recover if something unforeseen happens in the economy or the stock market."
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Think about it this way: "When you invest for the short term, you'll need access to your money sooner, which means it's best to choose less risky investments," said Experian. "Conversely, when investing for the long term, your money has more time to recover from losses and to take advantage of growth in the stock market," which "makes it more practical to pursue options that carry some risk."
Of course, you can also use safer investments on a longer time horizon, too, "but you miss out on a great deal of growth opportunity by being too cautious," said The Motley Fool. That is why "there's always a balance between risk and investing time horizon, and it's different for everyone."
What are examples of short-term investments?
With short-term investments, because you are "saving for an objective that you need to meet relatively quickly, such as a vacation, a down payment on a car or buying a new television, you can't lock your money up into investments with long-term maturities, nor do you want to invest in the stock market, which can be volatile," said Investopedia.
Keeping that in mind, here are some investments you may want to consider for short-term goals:
- High-yield savings accounts
- Certificates of deposit (CDs)
- Money market accounts
- Cash management accounts
- Treasury bills
- Short-dated government bonds
How might you invest for the long-term?
When investing long-term, you should "invest with growth in mind, not the day-to-day fluctuations in the market," said Investopedia. You will "want investments allocated across different asset classes," though "your exact mix of investments will be dependent upon your time horizon and risk tolerance."
Some examples of investments appropriate for the long-term include:
- Stocks
- Longer maturity bonds
- Exchange-traded funds (ETFs)
- Mutual funds
- Retirement accounts, like 401(k) plans and individual retirement accounts (IRAs)
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Becca Stanek has worked as an editor and writer in the personal finance space since 2017. She previously served as a deputy editor and later a managing editor overseeing investing and savings content at LendingTree and as an editor at the financial startup SmartAsset, where she focused on retirement- and financial-adviser-related content. Before that, Becca was a staff writer at The Week, primarily contributing to Speed Reads.
-
Aston Martin Vantage Roadster: 'a rare treat indeed'
The Week Recommends The Roadster version of Aston Martin's new Vantage coupé makes even 'the most mundane journey feel special'
-
Bad Friend: Tiffany Watt Smith explores why women abandon friendships
The Week Recommends A 'deeply researched' account of female friendship through history
-
Brazil's reborn dolls craze
Under The Radar The 'hyper-realistic' babies soaring in popularity in South American nation have spawned controversy
-
Withdrawing 529 plan funds for college? Here's what to know.
the explainer Maximize the amount you have stashed away for your education
-
US credit rating: what it is and why it matters
the explainer Credit rating agency Moody's downgraded the US last month
-
What to know before 'buying the dip'
the explainer Purchasing a stock once it has fallen in value can pay off — or cost you big
-
Is it worth appealing your property tax assessment?
The Explainer What to do if your property tax bill seems too high
-
3 tips for coping with financial stress
The explainer Feel more at peace in an unpredictable economy
-
4 ways to brush up on your personal finance knowledge
The Explainer It's never too late to improve your financial literacy
-
Should you buy before tariffs hit?
the explainer Panic purchasing may not be in your best interest
-
How can you find a financial adviser you trust?
the explainer Four ways to detect professionals who will act in your best interest