Most investors focus their attention on investment returns. They understand there’s risk – but … what does risk mean? One meaning of risk is not having the money when it is needed. Another meaning is that the returns change – in others words, returns are variable or volatile. So how does volatility change your focus?
First a discussion on volatility through the two articles below, and how volatility effects BOTH your savings and your retirement.
A prior post on why knowing and understanding volatility (standard deviation as the measure) matters.
So if volatility is one of the threats to retirement, what is another? A second threat to retirement is inflation … also known as loss of purchasing power. How is inflation a threat to retirement?
Both of these, inflation and volatility, are little considered threats to retirement. Both need to be considered and balanced with each other for your lifelong retirement plan to be successful.
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