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Guaranteed returns can be costly in retirement

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It’s been six years since the stock market fell to its Great Recession bottom, and American investors are still running scared.

A recent survey by Allianz Life found that 78 percent of Americans said they prefer financial products with guaranteed returns over other options — such as stocks — that have higher growth potential but a risk of losing value. In fact, just 28 percent of respondents said they are comfortable with market conditions and are ready to invest today.

Last year, Bankrate’s own survey found that 73 percent of Americans shunned the stock market in favor of low-interest-bearing accounts.

Studies in behavioral science suggest that when something happens twice, the human brain perceives the event as a pattern that will happen over and over, says Brad Jenkins, CEO of Jenkins Wealth in Centennial, Colorado.

“The stock market in the last 14 years has crashed twice,” he says. “Now, investors are just waiting for it to happen again.”

However, fleeing to the “safety” of fixed-income products can be much riskier than it seems.