Investing

Volatility

Volatility measures how much an investment's value swings around its average: higher volatility means bigger short-term ups and downs.

It's not the same as permanent loss: a diversified global portfolio is volatile, but has historically recovered from drawdowns over time.

The real risk for most individual investors is selling at the worst moment, which depends more on psychological tolerance than on statistics.

Related terms

Risk profile — Risk profile is the level of loss an investor can bear without jeopardizing their goals (capacity) and without selling in a panic (tolerance).
Diversification — Diversification means spreading investments across assets, sectors, countries and currencies whose behavior isn't perfectly correlated.
Rule of 110 — The rule of 110 suggests putting a percentage equal to 110 minus your age into stocks, and the rest into bonds.

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Educational content. netclariq does not provide financial, investment, tax or legal advice.