Investing is all about balancing risk and return to achieve your long-term goals. I think everyone understands returns (especially when they're negative), but what about risk? In finance, the most popular approach incorporates the volatility or standard deviation of an investment's returns. Standard deviation may sound a bit mathy, but if you break down the term – standard or average and deviation or dispersion – it is just a measure of the variability of returns. Of course, many more metrics have become common, including downside deviation, up/down market capture, and drawdown. Really, they are all trying to paint a picture of the risk of an investment based on its variability of returns. But is that 'risk'?

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