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Avraham "AY" Rappaport, CLTC
President, Financial Professional
Yaniv "Jay" Natanov
President, Financial Planner
Eli Rappaport
Vice President, Financial Planner
Shlomo Rosenstein
Financial Professional
Ozzie Marizan
Financial Planner
Joseph Greer
Employee Benefits Administrator
Dylan Pinsky
Client Relations Manager
Premier Financial
6395 Dobbin Road, Suite 102
Columbia, MD 21045
Phone: 240-309-6001
Email: dylan.pinsky@prudential.com
Website: premierfinancial1.com
January/February 2022
Risk and Volatility: Know the Difference
You may think of volatility and risk as interchangeable terms, but they’re not. Picture volatility as a two-way thoroughfare. Just as a car on that road can go in either direction, the price of an investment can go up or down over time. That’s volatility.
Risk is a one-way street. It’s the possibility that an investment will decrease in value and its price will drop. So, while volatility encompasses both the upside and downside of changes in the price of a security, portfolio or market segment, risk refers only to the potential for an investment to lose money.
Another Way to View It
Volatility is an objective measure of an investment’s price fluctuations over a specific period. Volatility can be positive over the long term but risky in the short term.Risk is subjective and personal. It’s different for every investor. Some investors believe they have a high tolerance for risk until they see their portfolio’s values drop.
Taming Risk and Volatility
Although taking some risk is necessary to earn returns that outpace inflation, there are strategies investors can use to cushion the impact.Dollar-cost Averaging*
Investing a fixed amount of money on a regular basis — regardless of share price, allows you to purchase securities in a variety of market conditions and may result in a lower per-share price. If you invest through a 401(k) or other qualified retirement plan, you may already be using this strategy.Diversification**
Spreading your portfolio among a variety of asset classes and investment styles may help to mitigate risk and make your portfolio less volatile. Your financial professional can help you choose appropriate investments.*Investing regular amounts steadily over time (dollar-cost averaging) may lower your average per-share cost, but this investment method will not guarantee a profit or protect you from a loss in declining markets. Effectiveness requires continuous investment, regardless of fluctuating prices. You should consider your ability to continue buying through periods of low prices.
**Diversification cannot eliminate the risk of investment losses. Past performance won’t guarantee future results. An investment in stocks or mutual funds can result in a loss of principal.
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Premier Financial is not affiliated with Prudential Financial. Premier Financial sells insurance products of Prudential Financial's affiliated insurance companies in addition to products of non-affiliated insurance companies. Premier Financial is authorized to sell and service certain insurance products of Prudential Financial companies as well as use this material. Premier Financial and its representatives do not give tax or legal advice. Please consult with your own advisors regarding your particular situation. Offering financial planning and investment advisory services and programs through Pruco Securities, LLC (Pruco), under the marketing name Prudential Financial Planning Services (PFPS), pursuant to a separate client agreement. Offering insurance and securities products and services as a registered representative of Pruco, and an agent of issuing insurance companies. 1-800-778-2255. Dylan Pinsky is employed by Eli Rappaport and not The Prudential Insurance Company of America or its subsidiaries.
This newsletter is general educational information provided by a Prudential Financial Professional and is not intended to market or sell any specific products and services, but rather provide general information about the subject matter covered only.
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