Short Term

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DEFINITION of 'Short Term'

1. In general, holding an asset for short period of time.

2. In accounting, an asset expected to be converted into cash in the next year, or a liability coming due in the next year. Also known as current assets and liabilities.

3. For investing, a security that matures in one year or less.

4. For taxes, a holding period of less that one year.

INVESTOPEDIA EXPLAINS 'Short Term'

As you can see from above, the exact definition depends on the context. However, in general, you can think of short term as within the next year.

The determination can be very important for taxes. Assets held short-term are generally taxed at a higher rate than assets held for more than a year.

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