Understanding volatility and risk

Some people look at falling prices and conclude that volatile markets are risky. When prices fall, they feel unnerved and if they need to access their savings next week then they are right to feel this way, but if that's the case then they should probably not be investing this money in the first place. For 'long-term investors', volatility is less of a concern. Volatility - the measure of how far the price of an investment moves - is sometimes low, sometimes high, but always a natural part of investing. Risk is the likelihood of an investment losing value, adjusted for inflation, over a longer period of time. Seasoned investors aren't as concerned by volatility because they know it can signal opportunity. They don’t sell in market dips because they know that would crystallise their losses. Instead, they embrace volatility like a best friend, buying when prices are low. Sometimes they use a regular saving plan to help, because although this doesn't just buy in the dips, it does allow them to relax.