What is volatility in investing?
Where a link is marked *, it is a partner link — we receive commission at no extra cost to you. Links without a * earn us nothing. How we make money.
In short: How much an investment's price swings up and down. Shares are more volatile than cash; a 20%–40% equity fall in a bad year is historically possible before recovery.
Last reviewed:
Reviewed by Kaiser Khan
Volatility is not the same as permanent loss — unless you sell during a downturn.
Longer time horizons absorb volatility better. Money needed within five years may suit lower-volatility assets.
See risk tolerance guide before choosing equity exposure.
Primary source: moneyhelper.org.uk/en/savings/investing
Part of our Investing & ISAs
This quick answer sits inside our wider investing & isas hub — with sub-guides, calculators and step-by-step explainers on the same topic.
Read the full investing & ISAs guide →