It can be difficult to save a sufficient amount of money to provide for a comfortable retirement. For someone who's worked hard to save for retirement, particularly over a long period of time, it can be particularly disheartening to see a chunk of that retirement savings evaporate into thin air because of adverse market movements. Thus most people seek safety when deciding upon the appropriate financial product for their retirement savings.
To illustrate this, my firm surveyed insurance agents – who also happen to be consumers – and asked them a simple question: When you are deciding where to put your retirement savings, which of the following four aspects is the single most important aspect for you?
Out of 2,721 responses, agents answered as follows:
| Making sure my money is safe | 73% |
| Having the potential to earn a high interest rate/rate of return | 19% |
| Being able to move all of my money at any time | 6% |
| Protecting and passing along the money at my death | 2% |
So, you can see that when consumers are deciding where to put their money, safety is generally their top priority. We see this in statistics published by the Investment Company Institute: In each month over the last two-and-a-half years, people took more money out of stock mutual funds than they put in. In fact, from January 2008 through July 2010, investors pulled a net amount of $244 billion out of stock mutual funds. During this same period, they put $589 billion into bond mutual funds.
Presumably, investors have moved money into bond mutual funds out of a desire to achieve greater safety. But have they found it?
