Planning to Retire

Baby Boomers: Still Too Scared of Stocks

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June 9, 2008 RSS Feed Print
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All retirement savers face this conundrum: Equity investments could lose principal during a bad year. But the interest on risk-free savings vehicles like certificates of deposit may not keep up with inflation. Most baby boomers are choosing to err on the side of caution, according to an online survey.

Many more workers age 50 plus say they understand and feel comfortable with savings vehicles like savings bonds and certificates of deposit, where there is little risk involved, than with more volatile investments like stocks and real estate, according to a Transamerica and GfK Roper Public Affairs and Media online survey of 2,015 working adults. Some 46 percent of the older adults are not very willing to put money into investments with any risk associated with them, which makes for much lower returns, Transamerica found.

If you don't understand how an investment option works, it's difficult to feel comfortable handing over your savings. About 48 percent of Americans over age 50 say they have a low level of experience with investing, the survey found.

Here's how older workers rated the comprehensibility of financial vehicles you can use to accumulate your retirement savings.

  Understand Comfortable
Putting
Savings Into
U.S. savings bonds 87 68
Savings accounts 68 49
Certificates of deposit 68 62
Money market funds 51 48
Mutual funds 49 46
Stocks 47 34
Bonds 47 45
Real estate investments 46 30
Annuities 42 35

Source: Transamerica, 2008

 

 

 

 

 

 

 

 

 

 

 

Tell us, where do you feel comfortable stashing your nest egg?

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I would love to know the thoughts of others about investments of retirement money in precious metals, when and what.

rosie of NJ 1:00AM October 12, 2009

The paper U.S. dollar is another commodity truely subject to the normal supply and demand. When $$ Billions can be electronically created out of thin air, the suppy is nearly unexhaustable. There are already $$ trillions of dollars sloshing around the world due to deficit spending. Demand wise as time goes on nobody wants the dollar because there are too many of them out there. So don't be surprised if OPEC changes pricing to Euros or some other stable currency.

pineapple of NH 10:49AM June 11, 2008

I put my retirement money in secure items such as certificate of deposits etc. The returns are not great, but the principal is secure. The interest also covers inflation plus a little extra.

Many experts are recommending stocks or the stock market as the way to go. They point out the rate of return over an extended period of time. What they forget is that stocks are at an all time high. The current period started in 1981 with the Dow Jones at about 600 and has risen to about 12000. There have been some temporary dips, but nothing sustained. Someone else can cite other indexes that have not done quite as well or may have done better.

The issue is whether there is a downside risk and do you want retirement money in a vehicle with this down side risk. Look at the various depression years. Start with 1929 and look to see how long it took for stocks to recover. Look at 1966 (a high time) to 1981 (a low time) when the Dow dipped . by 40%.

One can argue that stocks are risky over the short or the long haul. In the 1970's the philosophy was to put in the stock market only the amount you can afford to lose. Would I feel comfortable with losing my money? No. But I can afford to lose it.

To those experts who tout stocks I ask: What do you gain by touting these stocks? Do you have a vested interest in doing so?

I say that one should invest the way one is comfortable.

Stu C of PA 10:38AM June 11, 2008

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