What is the Cboe Volatility Index and how does it affect investors?
Are you a new investor who is excited about making short-term and long-term investments to grow your wealth? There are many opportunities for success in the market, but you have to be focused and smart with your investment decisions. Poor investments can lead to the loss of wealth. Smart investments can lead to a large retirement nest egg.
One tool you can use to help protect your savings and make smarter investment decisions is the Cboe Volatility Index (VIX). Following VIX helps investors get an idea of how the market is going to behave in the near future, so investors have an idea of what they need to do.
How does VIX work?
VIX tracks the market in real time. It follows the price inputs of S&P 500 index options to measure market risk and investor sentiments.
Market volatility refers to wide swings of prices in a short period of time. This can be measured a few different ways. In one method, investors can measure current performance against historical performance over a similar time period.
A second method measures volatility by inferring the market value implied by option prices. VIX uses both of these methods on the S&P 500 to build a 30-day benchmark that predicts the volatility of the S&P 500, which is a large index that indicates the broad performance of the U.S. market.
Talk to a ProVise CFP® professional about managing your investments and finances
VIX is a useful tool for making investment decisions, but it is not the only tool available to you. Using VIX alone, you might panic-sell out of fear of a bear market. Instead, working with a seasoned financial professional can help you understand VIX and other aspects of the financial landscape, so you can make better investment decisions.
At ProVise Management Group, our CERTIFIED FINANCIAL PLANNER™ professionals can get to know you and your current financial circumstances, goals, risk tolerance and personal values to help you develop a plan that works for you. We can also create a written plan for you at a fiduciary standard of care. All our written plans come with an unconditional money-back guarantee. If you are unhappy with your written plan, you can return it to us, and we will refund 100% of the fee paid.
Are you ready to talk to a professional about managing your investments and finances? Contact ProVise today to schedule a complimentary consultation.