Return/Volatility comfort is the level at which an investor is willing to tolerate the risk of not meeting return expectations in exchange for the potential of making a higher return. This is often referred to as risk tolerance.
An increase in rate of return is usually accompanied
by an increase in volatility
The volatility of income Investments that are based on bonds and dividends.
investments is lower than that of equity Investments that are based on stocks and securities.
investments.
Income and equity investments are not positively correlated, i.e. income investments tend to fluctuate upwards when equity investments are fluctuating downwards and vice versa.
Low Return/Volatility Comfort Profile
A conservative investor who is uncomfortable with high volatility, regardless of knowledge level or experience in investing.
An aggressive investor who wants to increase return and is less concerned about volatility.
An investor who is comfortable accepting some level of volatility to increase returns.