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Does volatility turn you on?

By Judy Martel · Bankrate.com
Sunday, January 22, 2012
Posted: 10 am ET

Building wealth through investments isn't so easy these days. During the nearly two-decade-long market boom that ended in 2009, it was much simpler to invest and forget it. But now, many investors are beginning to realize that safety won't make them rich, even if they do sleep better at night.

In spite of the drubbing many portfolios took when the stock market plummeted in 2009, along with the volatility of the past two years, older investors in particular are eager to get back into the market, according to an article in Investment News.

Retirees have been struggling with low yields on bonds, bank CDs and other conservative investments and are now hungry for potentially higher returns, even if it means more risk of loss. Some advisers speculate that the volatility in the market these past few years has worked in its favor: Investors are developing more immunity to the emotions of watching the market's ups and downs and feel better able to handle it.

Of course, even in the stock market, some sectors are riskier than others. Trying to determine which of them will deliver returns in 2012 is a losing game, so the key is to be diversified while still meeting income needs. Experts have been saying that in 2011 and into 2012, dividend-paying stocks have been the best option for income seekers. Others are predicting that emerging markets, which didn't perform too well in 2011, might be poised to deliver returns this year or next. Figure out the percentage you can put at the most risk for future returns and how much income is needed for the shorter term. As a retiree, you won't have as much time to make up investment losses as a younger person.

Are you considering putting more of your safer investments back to work in the stock market?

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