Payback horizon is the amount of time that has to elapse before you see a return on your investment.
When you open a CD (Certificate of Deposit) in a bank, they make two things very clear
* what is the return
* when will you get that return
So this is one of the few cases where the payback horizon is very clear. No ambiguities there. Unfortunately, there are so many areas in life where it is not possible to peg payback horizons for your investments. Here is a thought:
Now, how about extending that thought for the next five years. What are the nature and amount of investments you need to make to spread your payback horizons for the next five years?
How about extending this to the next few decades?
Smart people unconsciously design their lives to spread payback horizons. Doing this consciously will increase the effectiveness by leaps and bounds.
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