What Is Volatility?

Volatility is the degree to which an account or particular investment might swing up and down in value over a short period of time.

High volatility is not necessarily a bad thing. When the market goes up by 80% over a few months or over a couple of years, nobody complains. But when it goes 40% people tend to panic. Smart investors know that that’s the time to buy.

The important thing is to hang in there and ride it out. When I look at your portfolio, the first think I usually do is assess its volatility compared to your risk tolerance and often a volatile account will perform best over the long term. If your risk tolerance is not high and you have a tendency to want to go to cash when the markets down then you’re really not served at all by an aggressive portfolio.

As your financial planner, as I get to know you, we will consider your goals and create a plan with maximum diversification to minimize risk and ride out volatility together for the long haul of your investments.