What about those who are concerned and want to be prepared? Given the recent volatility in the stock markets, both here and abroad, there is more apprehension among investors than there used to be, prompting some to be more conservative with their money. Are they right in thinking that CDs and money market accounts are now preferable to stocks and bonds over the short term? Or is now precisely the best time to invest in the stock market?

If you want rewards, you have to take risks. If you don't want to take risks, you can't expect too much in the way of rewards. The reason you get those excess returns, the reason you get returns greater than you would otherwise get from having your money in a money market fund or a Treasury bond, is because there is that risk component to the stock market. And so the very reason some folks complain about and use to justify their not putting money into the stock market is the exact same reason why it pays off better than the less risky investments.

People have to be brave and go into it. Yes, there will be some periods of slumps. There may even be some periods of extremely prolonged slumps, and there is always a chance that you could lose a lot of money in a downturn, too. But all in all, the broad market indexes will over time be much more likely than not to give you a much better return on your money. Sure, it can be scary sometimes, but I guarantee you that back in July and August, back when the U.S. stock market went down, you had some very, very smart people, like Warren Buffett, buying stocks, putting significant sums of money into the market.

Now, not everyone might be well-served putting a lot of their money into the stock market. If you're already a senior, this might not be a good idea. The woman who is 83 years old, for example, will be much better off keeping her money liquid in CDs or money markets that pay that safe-and-steady, 5-plus-percent rate of return. Even putting money into a broad-market index fund could be too risky for a person in that particular situation.

But for younger people, investing the bulk of their money in "safe investments" has two significant risks that cannot be minimized: the inflation risk and the longevity risk. When you're young, almost all of your money should be in stocks. And only as you get older should you have more liquidity -- more money in bonds or CDs.

And here I also want to add that I see a role for variable annuities to accumulate gains tax-free and then for regular (immediate) annuities to guarantee you money for your whole life. There are new versions of these with reasonable fees, inflation guarantees and other worthwhile features. They should not be ignored.