If you hold several mutual funds, your diversification increases dramatically. Variety plus Variety means holding funds in various market sectors and in different areas of the world. Cycles in various world markets do not always move in tandem with each other, so there are usually investment opportunities somewhere. It is important to choose the right mix, which is consistent with your own personal tolerance for risk. No one promised you that the trip is always smooth.
Some investments are volatile.
But if you stay the course when your investments hit a pothole, you'll do well over the longer term. The fact is, most of us don't need to know how our investments fare over the short term. If you are in the market for the long term, say 10 years or more, investment volatility really shouldn't be a risk factor at all. Just around the block Remember that volatility tends to be a short-term problem. These more volatile investments could drop in value in the short term, right when you have to sell.