Investing — especially in the stock market — is often compared to a roller coaster, with sickening drops and exhilarating peaks. But it’s better to think of investing’s volatility and risk as a road trip, experts say, with the terrain of the moment less important than the progress you are making toward your destination.

Volatility and risk are related but distinct concepts that are often used by experts interchangeably. By sorting out how professional investors understand and use each of these dynamics, you’ll truly understand the logic behind their recommendations, experts say.

In everyday language, volatility means the ups and downs in a stock or fund’s current valuation. But there’s more: By how much is it up or down? Over what time period — a day? A week? Year over year? And does daily volatility even out over time, resulting in a relatively smooth trend line for that fund or stock?

Professional investors calculate many factors into their definition of risk, but when individual investors speak of risk, they are not usually thinking in theoretical terms, says Mark Luschini, chief investment strategist at Janney Montgomery Scott in the District of Columbia. Analysts and fund managers assess risk in terms of statistical deviations, he says — how much more or less risky a particular investment is compared with similar investments.

But usually, individuals’ definition of risk is personal: “They’re thinking, ‘Can I lose my money?’ and not, ‘Can I lose my money on paper — with a long-term investment going down for a while?’ but, ‘Can I lose my money permanently, absolutely, like a bond that defaults or a company that goes bankrupt?'” Luschini says.

Volatility and risk are emotional minefields because they feel like forces out of our control, says John C. Alexander, a finance professor at Clemson University.

Volatility is all about what’s happening in the market, and individuals don’t have any control over that. But you do have control over how much risk you take, and “you can be aware of how volatility changes your perception of risk,” he says.

That’s why advisors recommend constructing a mixed-risk portfolio. The goal, Alexander says, is to include types of investments that balance out in terms of risk (the classic pairing is stocks, whose value generally moves with the market, and bonds, which deliver guaranteed income that is relatively low). But you can balance risk even with a category of investments, such as buying a fund of stable, proven stocks in large companies along with a fund composed of young companies with high but unproven growth potential, Alexander says.

Market risks break down into two main subcategories, says Jason Hovde, senior director of certification and designation programs for the College for Financial Planning in Centennial, Colorado.

Systemic risk involves big factors that affect swathes of the market, such as interest rates, currency exchange rates and one-time events like the 2010 flash crash. You can’t control systemic risk, and you can’t diversify your way out of it, Hovde says. Advisors, analysts and money managers express systemic risk by using the term “beta” to describe how well an investment is doing compared to an index that reflects the big-picture trends.

“You’re measuring either an individual equity or a portfolio against a benchmark. And beta will tell me how volatile that portfolio is against the index. If I have a portfolio of large-cap stocks, the [Standard & Poor’s 500 index] is my benchmark. If the S&P goes up 10 percent, then I’d expect my portfolio goes up 10 percent,” Hovde says.

The other type of risk is unsystemic, or tied to a specific investment. That’s how well a particular stock or fund does compared to its peers. Because much of that performance pivots on management, “those types of risks can be diversified away,” Hovde says. “If you have large, well-established companies and a few growth companies in different sectors, you will have some going well when one or two are having problems,” he says.

Don’t get tripped up by comparing the amount of risk across categories — for instance, trying to line up gold with tech stocks — because risk is only meaningful if you are using correct benchmarks, Hovde says.

Volatility and risk intersect in investors’ minds when the stock market is peaking or dropping, and those periods of fast change tend to drive decisions geared to get in or out of the market based less on the actual value of the equities and more on the momentary direction of the market, Alexander says. A full market cycle — peak to valley to peak — usually takes about 10 years, experts say, and that’s key context when daily headlines have you wondering if it is time to buy or sell.

That’s why Alexander and other experts say it is essential to base decisions not on market fluctuations — i.e., short-term volatility — but on your own long-term goals. “Your age, the liquidation date of your portfolio and your network are three risk factors not related to the market,” Alexander says.

Time is the key factor for understanding what both volatility and risk mean to you, experts say.

If you’re getting worried, take a step back and look at your long-term goals. “Any given day, the stock market will or won’t reward the underlying fundamentals of a particular company. Your goals and what you need to accomplish to get there haven’t changed,” Luschini says.

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Why Investors Need to Tolerate Risk originally appeared on usnews.com