Suppose a summer vacation next year is one of our short-term goals. This time horizon suggests the stock market would not be a good place to invest the money we’re saving. This segment of the capital market is subject to volatility. We wouldn’t want to sell our shares at a loss because it’s time to buy airline tickets. It’s best if we don’t invest any money in equity securities that we’ll need in the short-term. Low-risk savings accounts, money- market mutual funds, and certificates of deposit that mature about the time we’ll need the cash, are much better choices.
Chris Bryant is an American financial advisor.