Risk is more than just the chance of losing money. It is also about not having the money you need at the time your need to spend it. Understanding the different components of risk can help you make smarter decisions about how to best allocate your portfolio.
Reflect
If you've been watching the market the last few days, you may be feeling a bit surprised by the sudden increase in volatility. This is the perfect opportunity for you to review your risk tolerance and reflect on your immediate reaction to unexpected market fluctuations.
Engage
In the comments, we encourage you and your fellow members to answer three questions:
- If you are holding investments, how did you initially feel when you heard about the downside volatility in reaction to the new coronavirus variant and Federal Reserve chairman Jay Powell's remarks to Congress?
- Does market volatility like what we are currently experiencing right now make you want to act more conservatively or aggressively, and why?
- How are you responding to this market fluctuation? Are you leaving your portfolio be or are you reevaluating/rearranging some of your securities?
Remember to watch the Step 2: Lesson 2 video and participate in the above activity. The more lessons you complete, the closer you are to receiving a completion badge!
Example:
- When I heard the news, I initially ran to check my own stocks to see how they are weathering. When I saw the red downward arrows on my finance app, I felt regret that I didn't act to buy additional shares.
- It makes me want to act more conservatively in the future.
- I am leaving my portfolio alone since my investing focus is long-term in nature.
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Jenna Brashear
AAII Community Manager
Chicago, IL
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