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These are truly the times that try investors’ souls …

With the S&P up 22% in the past 12 months, millions of investors are throwing caution to the wind; diving headlong into the market. 

But judging by the posts readers are leaving on my blog, cautious, more prudent investors are worried sick about the safety of their portfolios …

And many more — especially those who can’t afford to see their nest eggs shrink again — are still on the sidelines.

Curt is a case in point: “I have not been buying stocks because I believe that the U.S. stock markets are going to see a major correction,” he writes.

Marty shared Curt’s fear, saying: “There are retirees like me who are invested in CDs because our principal is not replaceable. Therefore, any element of risk is out of the question. Markets can plummet.”

And Tim said he’s been out of the market for a few years now, too: “I put all my money in CDs at local credit unions. Now those CDs are maturing, but I’m only able to get 2.15% for a 5-year CD. I have no faith in the stock market. So I will continue to purchase CDs because, even though the yield is terrible, the principal is safe.”

That can be pure torture. Subscribers say they’re watching everybody else make money but they fear that the minute they put THEIR money into the market, the whole thing will collapse like a house of cards!

So IS there a way to have your cake and eat it, too? A way to participate in this rally without throwing caution to the wind?

Or, if you’re invested in this market but losing sleep at night, is there a way to add extra layers of safety to your portfolio?

I’m here to help you find answers — and that’s precisely what we’re doing right now here on my blog.

Plus, in a few days, I’m going to give you my own answers — how you can have the best of both worlds: To participate in this rally WITHOUT becoming a hopeless insomniac.

First, though, I need to know more about YOU: So please tell me …

Which threats to the economy
and stock market are keeping YOU
from participating in this rally …
or have you sweating bullets
over the safety of your portfolio?

Just click this link and leave a comment to share your concerns. 

Or, if you have practical solutions for investors who are missing out on this rally — and who want to keep their money growing — be sure to share them, too!

Best wishes,

Nilus

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CLICK HERE TO JOIN THE DISCUSSION!

I’ve been pounding the table for dividend stocks. But now I want to know what YOU have been doing:

In the face of these major retirement threats,
have you been buying income-producing stocks?
And if not, WHY NOT?

Just click here to leave a comment and make your voice heard.

Looking forward to hearing from you,

Nilus

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In another case of the “great for today, horrible for tomorrow” planning coming out of Washington, I just wanted to point out that the tax deal — which has finally passed — includes a provision to LOWER the amount that workers will pay into Social Security next year by two percentage points.

It’s the height of irony that lawmakers are saying this decision won’t affect S.S. since the money will just come out of the general fund instead of taxpayer’s pockets.

After all, isn’t it ALL our money regardless of the line item it’s filed under? Isn’t this is the same basic fund that’s previously been raiding Social Security, too?

An even bigger question is will this “holiday” turn out to last longer than a year? And what then are the overall implications for a system that is already ailing and facing massive shortfalls?

I continue to think 2011 is going to prove a pivotal year on these matters …

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If you want further proof that dividend actions are looking good this year, consider just a few recent headlines:

Whole Foods said it would resume paying a dividend …

Tyco International is planning on boosting its payment by 20% …

And GE announced its second dividend hike this year!

With corporate coffers holding the most cash in half a century, I think this trend is only going to accelerate in 2011 … which is good news for income-strapped investors everywhere.

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Late last night, we got word that Ireland has finally admitted it has a problem and asked for help. And the European Union was right there, ready for an intervention. (Whether they can continue to be there for another couple “dropping shoes” is open for debate, however.)

One of the conditions of this new bailout is that Ireland will have to reorganize its banking industry.

According to  Irish Finance Minister Brian Lenihan, “The banks were too big a problem for the country. The key issue all the time for the government is to ensure that we do not have a collapse of the banking sector.”

And while everyone is worrying about banks over in Europe, it might be time for some of us to worry about the banks left standing here in the U.S.!

Sure, there has been renewed investor interest in this group of companies, especially in light of the possibility for bigger dividend payments going forward.

But is these firms really ready to move ahead and post consistently strong results going forward? Are all the problems behind them?

I’ll have more in tomorrow’s Money and Markets column, but here’s a quote from a recent Barron’s article: 

“The potential liability facing bankers arises from the $2 trillion in subprime, alt-A and option-adjustable rate mortgages that they underwrote and sold to investors, mostly as mortgage-backed securities during the home-lending boom of 2005 to 2007. The losses on the mortgages will be horrendous before the dust settles—over $700 billion on these and other so-called nonagency mortgage securities, according to New York mortgage-research specialist and broker Amherst Securities Group.

“And now investors—from the federal housing giants Fannie Mae and Freddie Mac to major bond managers like closely held Pacific Investment Management and BlackRock — are fighting back. They are seeking to put back the mortgages to the banks from whence the investment flotsam came and force the banks to eat much of the mortgage losses.”

Something to think about, isn’t it? 

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As I suggested in last week’s column, lawmakers have decided to make it a second straight year of flat Social Security payments. For the full story, click here.

I’ve said it before and I’ll say it again now: If you’re counting on the government to completely take care of you in retirement, please rethink that strategy!

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If you’re a Dad’s Income Portfolio or Dividend Superstars subscriber, you should be very happy today. After all, one of the stocks I recently recommended to you is now up nearly 12% on the day! While I don’t want to name the company here on a public page, I’m tracking an open gain of about 20% now … in about a month. Based on the importance of this tecnical breakout, more upside could come swiftly. So stay tuned … 

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Fortune’s Allan Sloan and I continue to think very similarly when it comes to Social Security’s current state. His latest piece is worth reading, especially for nuggets like this:

“[A quote from the 2009 Social Security trustees' report] says that, ‘Neither the redemption of trust fund bonds, nor interest paid on those bonds, provides any new net income to the Treasury, which must finance redemptions and interest payments through some combination of increased taxation, reductions in other government spending, or additional borrowing from the public.’

“In other words, the trust fund is of no economic value.

“This sentence wasn’t in the 2010 introduction, released last week. Treasury says it still stands by it, but that the Social Security trustees decided not to include it this year because it merely reiterates the obvious.”

Nice, huh?

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Now, Congress has made even death and taxes uncertain!

As this article from the Wall Street Journal points out, estate tax laws are in limbo and so are plenty of wealthy families. And some folks are taking “financial planning” to new extremes.

For example:

“In 2009, more than a few dying people struggled to live into 2010 in hopes of preserving assets for their heirs. Clara Laub, a widow who helped her husband build a Fresno, Calif., grape farm from 20 acres into more than 900 acres worth several million dollars, was diagnosed with advanced cancer in October, 2009. Her daughter Debbie Jacobsen, who helps run the farm, says her mother struggled to live past December and died on New Year’s morning: ‘She made my son promise to tell her the date and time every day, even if we wouldn’t,’ Mrs. Jacobsen says.”

I’ve got to respect the determination these people are showing to beat the taxman!

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