NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Introduction to Personal Financial Planning
Which of the following is a financial goal best classified as long-term in a client's personal financial plan?
Building a retirement corpus 25 years away is a long-term goal, because goals are classified by time horizon and anything beyond roughly five years is long-term. The smartphone, insurance premium and vacation are all due within a year, making them short-term goals.
- ABuilding a corpus for retirement 25 years awayCorrect
- BBuying a new smartphone in 4 months
- CPaying a annual insurance premium due next quarter
- DFunding a vacation planned next year
Explanation
Goals are usually classed by time horizon: short-term (up to about 1-3 years), medium-term (about 3-5 years) and long-term (beyond about 5 years). Retirement 25 years away is clearly long-term, while the others fall due within a year.
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