Ms. Tran, aged 45, is saving for her children's university education, which will begin in 10 years, and her own retirement at age 65. She has $200,000 saved for education and $300,000 for retirement. What effective time horizon should predominantly influence her overall investment strategy today?

Question: Ms. Tran, aged 45, is saving for her children's university education, which will begin in 10 years, and her own retirement at age 65. She has $200,000 saved for education and $300,000 for retirement. What effective time horizon should predominantly influence her overall investment strategy today?

Answer options:

• 10 years (education)
• 20 years (retirement starting) ✅ A combination with a greater weighting on the 10-year horizon
• A combination with a greater weighting on the 20-year horizon

Correct answer: A combination with a greater weighting on the 10-year horizon

Explanation: Ms. Tran has two distinct goals with different time horizons. While retirement is a longer-term goal, the education fund has a shorter and more immediate need (10 years). The shorter time horizon generally dictates a more conservative approach for that specific portion of the portfolio, and its immediacy means it should heavily influence the near-term strategic asset allocation.