10 steps to successful investing - Step 2: Decide on your Time Horizon

Once your goals are established, aiming for a deadline is also very important. Write these down beside your goals on the same page. Examples:

• I want to Retire at age 59.
• My kids will be ready for college in 2014 & 2016.
• I will buy my Yacht in September of 2008.
• Bill Gates will be jealous of my portfolio before I die. (Life expectancy: 78 years old.)
• I will need some cash to get married with in 6 months from now.

The time until you reach your goals is crucial in deciding which investments you need. On top of your long term goals, you'll also need to decide if you will need any cash in the short term for emergency or spontaneous usage. A portion of your investments should always be kept liquid in cash form, and what percentage of your portfolio is cash is something you should decide up front by weighing your short term needs.

Onward to Step 3: Are Tax Advantages right for You?