Description of image

Question 18

Time horizon determines the appropriate vehicle for holding reserves. Goals or needs within a short timeframe (typically under three years) should prioritize capital preservation and easy access; longer horizons can tolerate market volatility for higher expected returns. That’s why cash, high-yield savings, and short-term CDs are common for short-term goals, while stocks and bond funds suit multi-year objectives. This question checks the basic rule-of-thumb linking horizon to vehicle choice.

For a financial goal you’ll need in less than three years, which place is usually best to hold the money?

Did You Also Know...

By Wise Wallet

The Rule of 72 gives a quick estimate of how many years it takes to double money: divide 72 by the annual interest rate.