Despite the pundits' pronouncements of green-shoots or signs that the economy is on the mend, many investors remain scarred and understandably sensitive to the previously unimagined threats to capital market stability. In many cases, not only have they reduced their equity exposure to levels that will not help them beat inflation, many have pulled out of the publicly-traded markets entirely, and remain on the sidelines.

Return to Investing
If you are planning to retire on the assets you have accumulated or are accumulating, you need to get exposure to the equities markets and you need to do that sooner rather than later. Global equities markets work and you deserve your share of the positive long-term returns generated by them.

Generally, market declines cause panic, to quote a study by DALBAR - a leading developer of measurement systems for intangibles, such as customer behaviors, in the financial services industry. A 2003 study by DALBAR found "motivated by fear and greed, investors pour money into equity funds on market upswings and are quick to sell on downturns." The report goes on to say that in the past 19 years, the average equity investor has earned 2.57% annually compared to 12.22% for the S&P 500 Index. This study clearly illustrates the "reactive" nature of today's investors and just how much it costs them in return. It's important to recognize how much emotions influence investing decisions most often to investors' detriment.

Keys to Excellent Returns
As investors slowly emerge from their fear-induced stupor, it is important to review important principles

After September 18, insurance for money-market mutual funds is gone. Here's why you don't have to worry.

Since they were introduced nearly 40 years ago, money-market mutual funds have served as safe and reasonably high-yielding parking places for cash. And for all those years, there has been an implicit promise that the value of a share would stay at $1.

That promise was broken last September, during the worst of the financial crisis, when the Primary Reserve fund (a fund mainly for institutional investors) lost so much money that it "broke the buck" — its net asset value dropped to 97 cents a share. To forestall a run on money funds' assets by worried shareholders, the Treasury Department created temporary insurance that fund managers could purchase — and on which, all told, funds spent $1 billion. That insurance program ends on September 18.

No Worries

But even though the insurance safety net is gone, "there is a lot of back-end support remaining," says Peter Crane, president of Crane Data, which tracks money funds.

For one thing, about half of the money in money-market funds is invested in government securities and repos, which are overnight loans secured by the government. Bank certificates of deposit — including European bank CDs that are guaranteed by European governments — are also a growing component of money funds' portfolios. In addition, the U.S. government created a loan program to ensure that funds that need to raise cash to meet redemptions will not be forced into selling assets at reduced prices.

The Securities and Exchange Commission is considering new, stronger regulations to further reduce the