See if you notice anything wacky about these findings from NAVA, an annuity trade organization:

A full 63% of Americans aged 50 to 59 said they are concerned about whether they will have enough money to maintain their desired lifestyle in retirement.

When asked how much of their retirement assets they would be willing to invest in the stock market, 32% of surveyed baby boomers said they would not be comfortable investing anything at all. The figure rises to 41% for female respondents and 42% for single Americans surveyed.

And just 22% of all respondents would be comfortable investing more than 30% of their assets in the stock market.

To this, I say, "Whaaat?!"

Know the facts
Sure, the stock market is risky. But so are most investments. What matters is how risky each of your investment options is. If you invest in penny stocks, for example, there's a good chance your money will evaporate rather quickly. But how risky do you really think it is to buy a piece of Wal-Mart (NYSE:WMT) or Boeing (NYSE:BA)? Will Wal-Mart's earnings shrivel up? Will it close many of its 6,600-plus stores in the near future? I think not. Will some new companies emerge to steal much of Boeing's business, or will a form of long-distance travel better than flight be invented soon? Again, I think not. (Note that these are still far from risk-free investments -- Wal-Mart, for example, is now facing a big class action discrimination suit. But these risks are why it's smart to diversify and own a range of stocks instead of one or two.)

Meanwhile, over the short term, almost anything can happen in the stock -- and bond -- market. Look at these returns for the S&P 500 over several years, along with the return of T-bonds.

Year

S&P 500

T-bonds

1994

1.3%

(8.0%)

1995

37.2%

23.5%

1996

23.8%

1.4%

1997

31.9%

9.9%

1998

28.3%

14.9%

1999

20.9%

(8.3%)

2000

(9.0%)

16.7%

2001

(11.9%)

5.6%

2002

(22.0%)

15.1%

2003

28.4%

0.4%

2004

10.7%

4.5%

2005

4.9%

2.9%

Data compiled by NYU Professor Aswath Damodaran.

There's volatility in both bonds and stocks, though more in stocks. But overall, the geometric average annual gain in stocks between 1996 and 2006 was 10.3%, versus 7.1% for T-bonds. Over 10 years, a nest egg of $25,000 will grow to $67,000 at 10.3% per year, and to $49,700 at 7.1% per year. Which looks better to you?

It's also not necessarily true that when stocks fall, bonds always rise, and vice versa. Look at 1994, when stocks hardly budged but bonds sank. And in 2005, both categories had lackluster years.

This is still a small span of time to examine, though. Consider the research of University of Pennsylvania Professor Jeremy Siegel, who found that stocks outperformed bonds 74% of the time over all five-year periods between 1871 and 2001. Over all 10-year periods in the same span, that figure rises to 82%. Meanwhile, stocks outperform bonds 95% of the time over all 20-year periods and 99% of the time over all 30-year periods!

In retirement context
Let's think about retirement now -- because it's something that we all will need to have funded somehow. We need to grow our nest eggs, ideally in the most effective ways possible.

Yes, there are risks in the stock market. But there are risks on the roads, too, and we still drive. We just wear our seat belts and refrain from reckless driving, to reduce our risk of accidents. You can likewise reduce your investing risks by diversifying your holdings and allocating your assets intelligently. That may mean having a handful of mutual funds, perhaps with a dozen or so stocks on the side. (Within these, you can aim for a mix of stocks and bonds, domestic and international holdings, and large-cap, mid-cap, and small-cap ones.)

Which stocks?
Your next question might be, "So which stocks should I invest in?" My suggestion: Consider a simple broad-market index fund. And to try beating that without taking on lots of extra risk, consider significant dividend payers.

My reasoning is this: If you're afraid of stocks, you shouldn't jump into the market by loading up on daring fast-growers, because they can be rather volatile. Your risk tolerance is low -- which is not a bad thing, at least until you take the time to learn more about investing and perhaps get comfortable with more aggressive investing approaches.

Stocks that offer attractive dividend yields have some advantages for the risk-averse:

  • As long as the company is healthy, the dividend will be there through thick and thin, paying you even if the stock price temporarily slumps.

  • A company that pays a significant dividend is usually a healthy one, with relatively stable earnings. This is especially true if it has a track record of regularly raising its dividend. It has to be confident that it will be able to keep up those payments.

For some recommendations of strong and growing companies that offer hefty yields, I encourage you to take advantage of a free trial of our Motley Fool Income Investor newsletter service.

In the meantime, below are some relatively well-known companies with significant dividend yields. Our Income Investor newsletter offers suggestions that we've researched in great detail, but if you're up for doing some research of your own, consider:

  • Pfizer (NYSE:PFE) -- recent yield 3.9%; read Brian Lawler on it. Pharmaceuticals can be good defensive investments because people have to take their medicine no matter what the overall economy is doing.

  • General Electric (NYSE:GE) -- recent yield 3.0%; read David Lee Smith on it. Companies don't get much more reliable than this one, which has been around for some 115 years and provides many rather indispensable items, such as light bulbs, appliances, jet engines, medical equipment, and more.

  • Prologis (NYSE:PLD) -- recent yield 2.3%; read Michael Leibert on it. Prologis is, in its own words, "the largest publicly held, U.S. headquartered, global owner and operator of distribution properties." Think warehouses and industrial facilities.

Income Investor picks are beating the market to date by some 10 percentage points, and they recently offered an average current yield of more than 4%. Click here to learn more.

Wal-Mart and Pfizer are Motley Fool Inside Value recommendations.

Longtime Fool contributor Selena Maranjian owns shares of Wal-Mart and General Electric. For more about Selena, view her bio and her profile. The Motley Fool is Fools writing for Fools.