What is meant by "investment horizon"?

The term "investment horizon" specifically refers to the length of time an investor plans to hold an asset before needing to access the funds or before the investment is evaluated for performance. Understanding this concept is crucial, as it informs various investment decisions, such as the types of assets to invest in and the level of risk an investor is willing to take. For instance, a short-term investment horizon might lead an investor to focus on more liquid assets or conservative investments, while a long-term horizon might allow for more aggressive strategies with higher potential returns.

In contrast, other options do not capture the complete essence of what investment horizon means. While the duration of an investment strategy pertains to the choice of approach to investing, it doesn't necessarily reflect the individual investor's timeframe for holding assets. The average time it takes for investments to mature is a more specific concept relating to certain types of securities and does not encompass the broader investment horizon. Lastly, the time period for annual financial reporting relates to accounting practices rather than an investor's timeframe for asset management. Thus, the definition that aligns best with "investment horizon" is clearly the length of time an investor plans to hold an asset.