Investors remain anxious to find safety even as the stock market moves back toward positive territory for the year.
They're on pace to yank more than $20 billion out of stock funds this month, the fourth time in the last five months, scarred by the volatility over everything from the sluggish economy to Europe's debt crisis to the threat of another global recession.
Despite the recent market uptick, there's still plenty to worry about.
Fears remain that the Greek government may fail to pay its massive debts, which would wreak widespread financial havoc. Federal Reserve Chairman Ben Bernanke hasn't backed off from his statement early this month that the economic recovery "is close to faltering." And investors aren't fully convinced that the selloff that pushed the Standard & Poor's 500 index down 14 percent in the third quarter has run its course.
All the added uncertainty fuels any temptation to abandon stocks, as many already have done.
But "playing it safe" comes at a cost. Over the long run, fleeing to cash or buying Treasurys may be even more dangerous in this era of low interest rates as well as low returns. It can do permanent damage to your money's buying power and your retirement prospects.
That's the message financial advisers have been hammering home to clients who want to abandon the stock market, fearing a repeat of the 2008 meltdown or who are simply fed up with all the plunges.
Disillusioned investors, too, risk chasing an illusion of safety. So-called safe havens aren't all that safe anymore.
"This is what I say to clients: `There is no safety'," says Femi Shote, an investment adviser with Asset Harvest Group in McLean, Va. "What I preach is resilience, not safety."
Hints of improvement in the latest corporate results hold out hope for investors, while highlighting the risk of being on the sidelines. Joseph LaVorgna, chief U.S. economist at Deutsche Bank, says the stock market is "pretty cheap" after all the selling and could come back quickly.
"All this volatility doesn't engender a lot of confidence," LaVorgna says. "But some good news can quickly restore it. If it looks like the economy is still growing and there's some resolution in Europe, we could have the tonic for a powerful rally."
Whether that occurs soon or not, here's a look at the numbers confirms the meager payoffs of playing it safe.
_ Cash: Although it can provide a sense of security, cash doesn't hold its value well over time. The average yield on a money-market account is just 0.54 percent, according to Bankrate.com. Even the best-paying online savings accounts pay 1 percent or less. As recently as the summer of 2008, just before the financial crisis hit full-force, you could earn 5 percent on such accounts.
Certificates of deposit also pay poorly. The highest rates available are 1.15 percent on a one-year CD and 2.2 percent on a five-year CD.
_ U.S. Treasury notes: The safety of bonds is less rewarding than it used to be. The yield on the benchmark 10-year Treasury fell to a record-low 1.71 percent last month and remains near 2 percent.
_ Gold: It is far too speculative to be used wisely as protection against a falling stock market. But gold has been embraced by investors worried about rising U.S. debt, the possibility of inflation and a spreading European debt crisis. More and more piled in as the price nearly tripled in four years, reaching a record $1,891.90 on Aug. 22.
Since then, it has tumbled all the way back near $1,600.
Aside from gold's recent slide, a market-weary investor might reason that at least cash and other options offer less downside risk than stocks and the most protection for their accounts.
Investment experts, however, consider that thinking short-sighted. If you're too conservative, they note, you can outlive your money.
Inflation historically averages about 3 percent, so putting money aside that earns less than 1 percent means its value is eroding over time. Keeping money in the stock market is the likeliest way to stay ahead of inflation, or at least keep pace.
Even in a period that included two sharp declines in the market, the S&P 500 index had an average annual return of 7 percent for the 15 years from mid-1996 through June 30. That's hard to match elsewhere.
Investors who ditch stocks are removing future growth from their portfolios and need to compensate elsewhere.
"When you sell, you need to simultaneously increase the amount you're contributing to that account," says Stuart Ritter, a certified financial planner for T. Rowe Price in Baltimore. "Or if you're in retirement, you need to withdraw less. Otherwise you have no chance to keep up with inflation."
Then there's what economists call the opportunity cost -- what you miss out in the long haul by leaving.
Over the longer term, the case for staying in stocks is even more compelling. History says the market is highly unlikely to decline over any 10-year period, recent times notwithstanding. On a rolling basis, the S&P 500 has produced losses in only four out of 76 different 10-year periods since 1926, according to a T. Rowe Price analysis.
Those who want to keep their cash on the sidelines until the market calms down, even for a few days, do so at risk of missing a comeback. An investment that excluded the best 10 days of the S&P 500 in the past decade would have posted an annual loss of 1.5 percent rather than a gain of 5.3 percent.
Investors who sat out even part of the 2009-11 bull market learned the hard way.
When panicked clients call Joe Adkins of Financial Advisors International with a request to sell after seeing the Dow drop hundreds of points, the Orlando, Fla., money manager offers a ready reminder. Had they sold stocks in March 2009 when the market bottomed and bought back in in December 2009, he tells them, they would have missed a 4,000-point gain in the Dow -- nearly two-thirds of the two-year bull-market rally.
"You shouldn't manage your money based on the headlines," his advice goes. "Just weather the storm, because if you go to cash you risk running out of money."
Besides telling clients to stick with the market, many advisers are steering them toward large, stable, blue chip stocks with a history of paying annual dividends of 3 percent or more.
Others recommend sinking a small percentage of holdings into alternative investments _ a catch-all term for such instruments as hedge funds and commodities. Alternative investments can be used as a tool to reduce overall risk through diversification. But the complexity, cost and lack of liquidity typically don't make those the safest of investments, either.
Ultimately, those who can't tolerate short-term risk for the likelihood of long-term gains may find a comfort level with simply a smaller percentage of their money in stocks.
They just have to realize that caution will probably cost them in the end, according to Pat Dorsey, director of research and strategy for the Sanibel Captiva Trust Co. in Chicago.
"Certainly if you are just a very nervous person, prone to getting out of the market every time the Dow drops 2 or 3 percent, having higher cash or bond allocation may make sense," Dorsey says. "But you've got to dial down your (lifestyle) expectations for the future if you do that."