Volatility generally refers to what is called “standard deviation”. The volatility of an investment can be thought of simply as how the value of your account changes on shorter time horizons such as on a daily, weekly, or monthly basis. A higher volatility portfolio will have wider swings in value than a lower volatility portfolio.

For example, a portfolio with a value of $100 that could change in value to $50 or $150 next month has a much higher “volatility” than a portfolio with a $100 value that could change in value to $95 or $105 next month.

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