Medium Term

What Is Medium Term?

Medium term is a holding period or investment horizon that is intermediate in nature. The specific period of time that is viewed as medium term relies upon the investor's personal inclinations, as well as on the asset class viable.

In the fixed-income market, bonds that have a maturity period of 2 to 10 years are viewed as medium-term bonds.

A day trader who rarely holds [open positions](/vacant position) overnight may consider a stock that is held for a long time as a medium-term position, though a long-term investor could characterize medium term as a holding period of one to three years. Likewise, homeowners might respect anything short of 10 years as a medium-term horizon as it connects with real estate.

Medium term can be stood out from both short term (frequently viewed as under a little while) and long term (longer than 10 years).

Figuring out Medium Term

Determining an investment's time horizon, additionally called its term, is generally founded on the aim or goal behind the investment, as opposed to the idea of the investment itself. An investor should seriously mull over when the funds will be utilized for different goals, or whether a lump sum or an income stream is the ideal outcome. The most common terms are short, medium, and long.

However the term doesn't be guaranteed to mean a specific timeframe, many believe anything below two years to be short-term; from two to a decade as medium term; and anything past 10 years to be long term. Since these time periods are flexible and not entirely clear, what may be a medium-term investment for one person may be described as a long-term investment for an alternate investor.

An investor's risk tolerance is vigorously impacted by the term of the investment. For instance, in the event that you mean to purchase a vehicle inside the next two years, it's wise to conservatively invest. You should seriously mull over a traditional savings accounts or a CD (assuming the suitable time until maturity). Since the funds are required soon, volatility in higher-risk markets may really keep one's goals from being reached.

While saving for longer-term goals, for example, retirement in 20 years, you can generally stand to take on a greater level of risk fully intent on generating higher returns early. Since the funds won't be required for a long while, the account can endure a certain degree of market vacillations. As a person starts drawing nearer to retirement age, the assigned time horizon might shift from long-term to medium-term, provoking a push toward additional conservative investments.

In the event that your goals are medium-term, you ought to look for a balance among risk and returns — act more conservatively than if your goals were long-term however opt for more risk than if your goals were short-term options. A few instances of medium-term investments are different types of bonds (with maturity dates somewhere in the range of three and 10 years), income funds, or growth funds.

Features

• Medium term is a holding period or investment horizon that is intermediate in nature.
• The specific period of time that is viewed as medium term relies upon the investor's personal inclinations, as well as on the asset class viable.
• In the fixed-income market, bonds that have a maturity period of 2 to 10 years are viewed as medium-term bonds.