The price of a security goes up and down based on supply and demand pressures from investors. Volatility measures how much a security’s price moves.
The What, Why, and How of Investing

Investing
Market volatility tends to occur when something unexpected happens. In this case, the coronavirus (COVID-19) and its impact is creating uncertainty in the markets, leading to fluctuations. Though it can be nerve-wracking for investors, volatility is actually a normal part of investing and has both positives and negatives. On one hand, extreme volatility can lead investors to make short-term decisions that are out of sync with their long-term investment goals. On the other hand, volatility can create potential opportunities for seasoned investment managers.
Extreme market volatility and market downturns are inevitable – but markets have bounced back from crises in the past. Remember you’re invested for the long term: Resist the temptation to invest based on how you’re feeling at the moment, and focus on your long-term goals.
Diversification is an investment strategy that helps mitigate risk by investing a portfolio across different asset classes. In this way, if any single investment or asset class does badly others might compensate by performing well, potentially smoothing returns overall.
Most individuals are investing for more than one goal. These can include more immediate goals such as generating income to supplement earnings and longer-term goals such as accumulating assets for retirement. A professional financial advisor can be helpful in balancing these goals and selecting appropriate investments to pursue both.
Investing can help individuals reach their financial goals such as increasing their wealth (called capital appreciation), generating income or protecting their money (capital preservation).
Investing is the act of committing money now with the goal of receiving more money in the future.
An individual will need to identify their investment goal (what you need the money for), their investment timeframe (how long until you need the money)and their risk tolerance. With that information the investor (and their advisor if they have one) can develop an investment plan.
An investment portfolio is a collection of investments. An investor can buy a single security (for example a stock or a bond) or they can hold numerous securities in a portfolio.
Investors interested in growing their assets are pursuing a capital appreciation strategy. Capital appreciation is an increase in the price or valueof an investment. Stocks have historically provided the best opportunity for capital appreciation over time, but bonds can also offer appreciation potential. There are no guarantees that the value of stock or bond investments will appreciate and in fact they can lose value.
An investor who starts early and invests consistently can accumulate more assets. In addition, the longer time frame allows an investor to ride out volatility and to realize the benefits of compounding interest.
It is impossible to accurately predict future returns. Over the last 20 years, stocks (as measured by the S&P 500 Index) returned an average of 7.72% per year and bonds (as measured by the Bloomberg Barclays U.S. Aggregate Bond Index) returned an average of 4.63% per year.* It is important to note that past performance is no guarantee of future results. *As of 31 August 2018.
Investing For Retirement
Retirement investing is investing money with the goal of accumulating a set amount, by a set date, to provide a source of income during retirement.
Investing During Retirement
While individuals may retire at any age, they cannot access Social Security benefits until age 62. Workers will only receive 100% of their Social Security benefits, however, if they wait until full retirement age, which varies depending on birth year. Individuals can receive higher monthly checks if they delay collecting benefits beyond age 62. Source: www.ssa.gov