The most important thing that you need ask yourself before you make any investments, is my investment for long term or short term? This is critical because the different categories call for different plans of action. Although the definition for long term and short term are subjective, when it comes to personal finance, you use the following rule of dumb:
- Investment less than 2 years is short term.
- Investment between 2 to 5 years is medium term
- Investment more than 5 years is long term
In my personal financial investment strategy, I only focus on 2 things – short term and long term. It is the same reason the way I buy unit trust. I don’t buy Balanced Funds because it is in the middle. To become financially independent or achieve financial freedom, investment is a MUST. Mixing your the short-term and long-term investments reduce your risk. Remember one last key thing, what is appropriate for long-term investment is often the wrong strategy in the short-term and vice-versa. Don’t apply the same technique in both investments. and it won't work.