Some Are Too Scared to Invest

Millions of investors moved their retirement funds into money-market funds and other havens during the financial crisis. Sitting on the sidelines caused them to miss the stock market's huge rally since then. They now face some difficult decisions. Most people—if they hope to maintain their standard of living in their old age—know their savings will need to earn more than the roughly 0.5% interest that most bank accounts pay these days or the 1.85% they would get from a five-year "jumbo" certificate of deposit.

Still, it is a risky time to invest. Stocks are flirting with record highs. Interest rates have nowhere to go but up, which will cause bond prices to drop. While you can't control the markets, you do have some control over costs, at least in funds outside your employer's plan. In a low-return environment, you don't want to fork over 2% in annual management fees on a fund with a 4% annual return. You still might not be ready to make a move, but you can get an investing plan in place.

Source: Wall Street Journal

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