Volatility Explained: Understanding Investment Fluctuations

Honest Money

In this episode, Warren Ingram and Chris Rule, Head of Products and Client Solutions at 10X, discuss the difference between volatility and risk in investing. They discuss that volatility, understanding the difference between permanent loss of capital and volatility, and how to manage and mitigate these risks through diversification and goal setting.
Takeaways

• Volatility is the measure of how much an investment goes up and down, while risk is the chance of not achieving your financial goals.
• Permanent loss of capital is when an investment goes to zero and you will never get that money back.
• Risk can be managed and mitigated through diversification, goal setting, and sound planning.
• Behavioral biases, such as fear of missing out and loss aversion, can affect investment decisions and should be managed.
• Investors should focus on the risks they can control and dial down the noise from media headlines.

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Chapters

1. Volatility Explained: Understanding Investment Fluctuations (00:00:00)

2. Understanding Risk vs Volatility in Investing (00:00:02)

3. Understanding Risk and Investing Goals (00:08:20)

4. Managing Investment Risk Through Diversification (00:18:35)

5. Achieving Dramatic Results in Investing (00:27:34)