Non-Fluctuating

The characteristic of constancy in a security or measurement's value, rate of change or other metric. Non-fluctuating is a feature of a fixed-rate asset which has a constant yield, such as a government-issued debenture (which, however, the market price of the debenture will fluctuate as interest rates change.) A non-fluctuating characteristic is the opposite of a volatile characteristic where changes in value do occur. An investment that has non-fluctuating returns with little risk tends to have lower returns than investments that are exposed to volatility.

In contrast, common stock of a public corporation is more likely to fluctuate in both dividend yield and market price. Dividends paid on preferred stock are non-fluctuating; that is, they are paid at a fixed rate. Dividends paid on common stock, on the other hand, can fluctuate, though some secure and stable companies, such as blue chips, may offer steady dividends. Other non-fluctuating investments include money market funds (which are similar to savings accounts), savings accounts and certificates of deposit.

The amount of non-fluctuating assets to incorporate into an investment portfolio largely depends on an individual’s long-term goals, risk profile, time horizons and other factors. Case in point, it would make sense for an investor with short-term goals, ranging from one to three years, to tilt towards relatively safe, non-fluctuating-type assets like certificates of deposits, higher interest savings accounts, fixed annuities and money market funds that produce reliably predictable yields adn dividend income--regardless of stock market fluctuations and other economic factors that fall outside the realm of his or control. Contrarily, long-term goal oriented investors with time horizons of five years or more, may want to consider stocks, bonds or mutual funds that focus growth stocks and sector specific stocks.

An investor’s level of discipline when it comes to saving money, should also influence the amount of non-fluctuating assets in their portfolio. Individuals who habitually spent more than they earn or carry high monthly credit card balances should counter those measured with more stably performing, non-fluctuating investments. But those with discretionary income may benefit from allocating more money towards riskier bets that might yield higher returns. Even if they don’t produce fixed dividend payouts, such investors typically don’t rely on such investments to cover normal living expenses. But even investors who fall under the latter category should fashion a portfolio that boasts a healthy mix of fluctuating and non-fluctuating assets.