Protection from volatility
Price volatility is the fluctuation in the value of an investment based on changes in demand. While volatility can provide opportunities for people who emphasize trading, it can present risks to investors when they need to sell.
Understanding Volatility & Liquidity
Price fluctuations, also referred to as volatility, can be your friend if you like to trade. Trading involves buying and reselling investments frequently in the hopes of making short-term profits on price fluctuations. Liquidity is the ability to sell an investment and convert it to cash easily and quickly within predictable price ranges without effecting the market price. Most stocks, bonds, mutual funds, ETFs, and REITs offer a high degree of liquidity, but with liquidity comes volatility which introduces price risk when it comes time to sell.
Investors seeking income and capital preservation typically don’t need interim liquidity during the holding period of the investment and instead prefer price stability. Liquidity with price stability is needed when it comes time to sell or redeem the investment.
At Stadia Capital Group, we emphasis investing over trading. Our focus is offering clients predictable monthly income with price stability and liquidity at maturity.