Wary investors shun stocks, risk retirement security

By Features

Despite the recent stock market rally, an alarming number of investors don't plan to ever invest in stocks again, according to a recent survey by Prudential Financial. The survey polled 1,274 Americans between the ages of 35 and 70 in an online survey through January 5 and found that 58 percent have "lost faith in the stock market" and a staggering 44 percent never plan to invest in stocks again.

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The study showed that investors are re-examining their financial and retirement strategies in light of the financial crisis, and they feel that new strategies are needed to make up for losses.

Prudential found that 72 percent agree that they need a new approach, with 61 percent of those polled indicating that they think the principles of investment diversification and asset allocation have changed, and many choosing a less aggressive investment strategy. Such strategies often incorporate FDIC-insured high-yield savings vehicles such as money market accounts and CDs.

The survey found that just 37 percent consider their investment portfolios to be aggressive, compared with 46 percent pre-recession. A full 40 percent consider their portfolio to be conservative today, versus 33 percent before the recession.

Investors need growth, but want guarantees

According to the survey, 73 percent of investors don't believe the investments they have today will ever make up for their losses during the financial crisis. Although they need high rates of return, 60 percent are not willing to take on proportionate risk - they want their financial investments guaranteed.

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"Americans clearly recognize the need for new approaches to retirement planning, with almost seven in 10 saying guaranteed lifetime income products are appealing," said Stephen Pelletier, president of Prudential Annuities, in a press release about the survey. "The findings are consistent with the trend we are seeing toward many investors including annuities in their portfolios to provide a guaranteed floor for their retirement income."

Conservative investors may not reach retirement goals

Prudential found that approximately 70 percent of investors have worked to make up losses, such as increasing their investments in workplace retirement plans, but may not be able to reach their retirement goals if they're shifting to a more conservative approach and missing out on better rates of return that can come with riskier investments.

"...Despite the fact that we are seeing some positive signs--such as increasing contributions to 401(k)s and other retirement savings vehicles--the lower interest rate environment and more conservative investing will require Americans to save even more if they are to achieve their retirement goals," said Christine Marcks, president of Prudential Retirement, in a statement.

The original article can be found at SavingsAccounts.com:
Wary investors shun stocks, risk retirement security

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