Individual investors wary of returning to the stock market can approach equities in a more protected vehicle: asset allocation funds. These spread investments across many sectors, including equities, money-market funds, bonds and convertible securities. They mitigate risk but also allow investors to share in any gains. "You will never be in a situation where everyone did well except you because you were in the wrong market niche," says Ned Notzon, head of allocation strategies at T. Rowe Price Group.

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