What exactly determines whether a time horizon is a single stage or multi-stage time horizon. I originally thought that if you had various goals that needed to be met over various time frames that this meant you had a multi-period time horizon. On this basis, when asked to comment on the investor’s time horizon, I would split it into various time frames aligned to the various goals outlined in the case. This is not consistent with one the Schweser case studies “Jane Guthrie”.
Key facts:
Investor is 36 years old and her goal is to retire at age 58 (in 22 years time)
She plans to contribute $175,000 to a trust within one year to fund education needs of adopted children
She also plans to take over looking after her mother within the next few years when the children go to college
I thought the answer would be multi-period time horizon:
One period of one year until contribution to trust is made
One period of 22 years to retirement
And one (un-quantified) time period until she needs to take responsibility for her mothers needs.
The solution refers to a single time period of 22 years to retirement.
Any advice on what to look at to determine single period vs multi - period?