Life, Love, And Money (PFI 1305) Test 1 Practice

Which of the following is a short-term financial goal (within one year)?

Purchase a rental property. Build an emergency fund of $1,000. Rebalance portfolio to a 60/40 split. Invest in a long-term retirement fund.

Correct Answer:

Build an emergency fund of $1,000.

Explanation:

Short-term financial goals are time-bound targets within one year that emphasize liquidity and getting money readily available. Building an emergency fund of $1,000 fits this because it sets a specific, achievable amount to have on hand in the near term, in a readily accessible account, to cover unexpected expenses. The other options represent longer-term aims or ongoing strategies rather than a defined one-year objective. Purchasing a rental property involves significant time, planning, and financing beyond a year. Rebalancing a portfolio to a 60/40 split is a tactical move that can be done at various times and isn’t tied to a one-year deadline. Investing in a long-term retirement fund is focused on decades into the future, not within a year.

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