Risk and volatility
How much, and how often, an investment's value jumps up and down.
What do risk and volatility mean?
Volatility measures how much an investment's value moves from one day, month or year to the next. A bank deposit barely moves. The stock market moves a lot.
In US stock-market data since 1871, with dividends reinvested and after inflation, almost a third of calendar years were negative (47 of 154). The worst, 2008, lost 39%.
The real risk for a person is not that an investment falls for a while. It is needing the money just when it has fallen. That is why the horizon matters: the longer until you need the money, the more time you have to sit through bad years.
There is another risk, talked about less often: not having enough at the end, because the money sat somewhere that did not keep up with inflation.
Over one year, US stocks lost money after inflation in 30% of periods. Over 20 years, in just one of 1,629.
Has the stock market ever lost money over the long run?
On the US market, over 20-year periods since 1871, in just one of 1,629, the one starting in June 1901, at −0.22% a year after inflation. Over 30 years, never. That is one market's history, not a guarantee.
How often does the market fall in a year?
In US data, almost a third of calendar years were negative after inflation (47 of 154).
Related terms
Sources
- Robert J. Shiller, monthly US stock market data (ie_data.xls), accessed 27 September 2026 · shillerdata.com
This page explains mechanisms and shows what happened in the past. It does not recommend products, say what to buy, or take your situation into account.