Tags: investors | stocks | bonds | S&P 500

Some Investors Forgo Stocks Altogether

By Dan Weil   |   Tuesday, 09 Jul 2013 08:52 AM

Some investors are completely avoiding stocks, despite their stellar historical gains.

Over the past 50 years, the Standard & Poor's 500 Index has registered an annualized return of 9.8 percent, according to Morningstar data.

And since March 2009, the S&P 500 has soared 146 percent, hitting record highs in recent weeks.

Editor's Note:
Billionaires Dump Stocks. Prepare for the Unthinkable.

But that's not enough for investors who crave absolute safety — and have enough money so that they don't need the historically larger returns provided by stocks.

Gary Liversidge, a 58-year-old Bostonian who works as chief technology for a biopharmaceutical firm is one of them. He's just worried about producing enough income to maintain his current lifestyle, The Wall Street Journal reports. So he invests solely in individual bonds.

If you can pay for your living expenses with income from safer investments, there's no reason for you to allocate more than 30 percent of your portfolio to stocks, Larry Swedroe, director of research at Buckingham Asset Management, tells The Journal.

And if your safe investments provide a lot more income than you'll ever need, you may be a candidate for zero stocks, he says.

"If you've already won the game, ask yourself why are you still playing," he adds. "That's the great tragedy: turning a large fortune into a small or insignificant one."

But others are more worried about the bond market. Goldman Sachs analysts say bond yields will hit 4 percent by 2016.

"Bond market carnage poses significant risks to economy and corporate America," TrimTabs CEO David Santschi, writes in a research note obtained by CNBC.

Editor's Note: Billionaires Dump Stocks. Prepare for the Unthinkable.

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