Market volatility is simply defined as the up and down movements in the price of investments. Investors need to consider their ability to continue investing through periods of market volatility and low price levels.

RISK VERSUS REWARD

There is a vast array of investments available with all different levels of risk. Some offer higher potential rewards, but a higher degree of risk, while others have lower risk, but also provide lower returns. The risk/reward triangle below illustrates the correlation between risk and return. As the risk versus reward triangle shows below, typically investment classifications with higher returns also typically have higher risk, whereas investment classifications with lower returns typically have lower risk.

Your role is to help your customers understand the risk/reward trade-off. Also, it is crucial that you help your customers select appropriate investments that match their objectives and fall in line with the level of risk they are willing to accept.