This is Everyday Wealth, with Award-winning journalist Soledad O'Brien and Personal Finance

expert Jean Chatsky.

Can you give me an example of speculation and let's talk about how it differs from investing or goals based investing.

Sure, so examples of speculation.

You've got crypto to some extent, penny stocks, currency plays, emerging market stocks, rare materials, pharma in some ways, collectibles, art, old cars, I mean anything where you hope to assign this incredible value to this particular investment and you hope

that you're able to find somebody down the road who shares that and wants to pay

a little bit more for what that investment is.

But the true difference or a, you know, a difference

between speculation where you're focusing on these types of investments

and more goal-based longer-term investing, it's all about risk.

It's all about volatility.

And one of the things that we talk about, one of the things that I try to help clients

with as they bring in these ideas and stuff that they read from

newsletters or something that they're getting pitched is, all right, how much risk are you

taking on to do what it is that you hope to do right?

You know, is the juice worth the squeeze in this particular situation?

And so when we sit down, when we look at the different investments I go in and talk in pretty specific

financial terms there's something called standard deviation and it's a statistical

measure in finance and it shows how distributed and investments returns are

around its mean return. So you've got the average return and then you have different points that show what the

investment has done in relation to that average return.

That distribution sheds light on that investment's volatility. that distribution, the

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