Because of the US stock market's phenomenal ride the past few years, it's easy to expect double-digit returns and feel disappointed if they don't materialize. We can't deny that major market dips can prompt pangs of alarm, but we also should remember that jumping in and out of the stock market at every bump could ultimately damage a retirement account balance. Here's a look at market volatility and a reminder of the importance of diversification and maintaining a long-term outlook when investing for retirement.
Future volatility makes up much of the risk of stock investing.
In simple terms, the overall market gains value when demand exceeds supply. It loses value when the opposite is true. Each individual stock has its own volatility pattern. Some stocks' prices remain relatively stable over long periods of time, rarely fluctuating in value. Others fluctuate wildly day to day.