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NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Introduction to Personal Financial Planning

Ms. Kavita Rao, aged 35, wants to build a corpus for her daughter's higher education. Which of these is best classified as a long-term financial goal for her?

Accumulating funds for a daughter's university education 15 years away is a long-term goal because goals are classified by time horizon and anything many years ahead counts as long term. The other choices are near-term or liquidity needs, so they are short-term goals.

  1. ABuilding an emergency fund equal to six months' expenses
  2. BPaying the annual premium of her health policy next month
  3. CSaving for a family holiday planned in eight months
  4. DAccumulating funds for her daughter's university education 15 years awayCorrect

Explanation

Goals are classified by time horizon; short-term goals are typically within about 1-3 years and long-term goals are usually beyond 5 years or more. A university education 15 years away is long term. The emergency fund, the premium and the holiday are near-term needs.

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