Four Levels of Volatility
This post was inspired byconversationI’ve been overhearing at work, from friends, from family, and from random people I meet on the street. Much of the conversation has been about the state of the economy andvolatility. They are scared about entering the market again and are debating whether or not to just keep their cash in their low yield savings accounts. I feel your pain fellow Americans! It’s a tough time out there but that is not an excuse to miss out on market gains! I totally understand people’s hesitation, but it’s ALWAYS a great time to enter the stock market. Wellll, if you’re in it for the long haul that is haha.To be honest, if you can’t stomach the volatility of the market, it might be better to wait it out. But for those interested in jumping back in, I highly recommend it ONLY if you follow some common Mis Sold PPI sense advice. First and foremost, make sure you have an emergency fund that is fully funded to cover 6 months of expenses for you and your family. The next step is to take a little risk. No risk, no reward, that’s life.But, you CAN manage your risk and create a nice cushion should the market fall. This “cushion” is created through a diversification of funds. I don’t recommend individual stocks, especially if you’re one who is scared about entering the market again. You should invest through low cost mutual funds, ETF’s, or low cost index funds. Although these options are diversified for you, you should take some levels of volatility into consideration.Remember, as an investor, you want to be compensated for taking risk. Here are four levels of volatility that you should consider depending on how “risky” you’re feeling.