What is Volatility?

Volatility is the intensity with which the price of an investment rises and falls. A volatile asset can appreciate 5% in one day and fall 3% the next. The higher the volatility, the higher the risk — but also the higher the potential for gain.

Examples of volatility

AssetVolatilityTypical daily variation
SavingsAlmost zero0%
Treasury SelicVery low0.03%
Stocks (Ibovespa)Medium1-2%
BitcoinVery high3-10%
Meme coinsExtreme10-50%

Is volatility bad?

Not necessarily. It depends on your profile:

  • Conservative: volatility is stress. Prefer fixed income.
  • Moderate: accepts some oscillation in exchange for higher returns.
  • Daring: uses volatility to their advantage (buys on dips).

How to deal with volatility

  1. Have a long horizon — in the short term, everything oscillates
  2. Diversify — different assets oscillate at different times
  3. Don’t check every day — checking prices daily generates anxiety
  4. Invest regularly — monthly contributions smooth out the average price
  5. Have an emergency reserve — to avoid having to sell at a low price

Volatility index

In Brazil, the main indicator is the VIX (fear index). When the VIX is high, the market is nervous. When it’s low, it’s calm.