No, we are not talking about an amusement park ride. We are talking about the recent bout of stock market volatility. We know that some of you are feeling uneasy and we thought it would be prudent to cut through the headlines and discuss some of the real issues.

Conventional wisdom tells us that volatility equals risk. Hence we are living in a very risky period in time. The current market volatility confirms this to be true. In order to better define risk, first look at your time horizon. If you need your money back in a few weeks to pay some bills, then your stock market investments are truly high risk.

Most of you are saving money for long term objectives (five or more years into the future). In this circumstance risk can be more accurately defined by the ability of your investment to maintain its purchasing power plus provide a modest return. In short, your invested money should produce a better return after tax than it would have done if you had deposited it in a risk-free savings account.

Some people will squirm with discomfort at the thought of having their money invested in a "volatile investment." However, there are others, called value investors, who cherish the thought of market volatility. This is their time to pick up some bargain prices on stocks that were too expensive a year ago.

When investing in the stock market you cannot avoid volatility. J. P. Morgan is quoted as saying, "The only thing certain about the stock market is that it will fluctuate." Fighting the urge to panic is the hallmark of a calm investor. Another noted financial author, Nick Murray says: "No panic, no sell. No sell, no lose."

Act as a value investor and look at this as a time to buy. In the future this may be looked at as one of the best buying opportunities of the century. If you too are feeling uneasy about the current stock market volatility, speak to your financial advisor to make sure your portfolio mix is suited to your personal risk profile.

This is a monthly article on financial planning. Call or write to Rick Sutherland CLU, CFP, FDS, R.F.P., of Fundex Investments with your topics of interest at 798-2421 or E-mail at rick@invested-interest.ca.