Investors are scared. The value of their portfolios has plummeted. Now many are seeking safety instead of returns.

If you are one of those investors, you need to understand the different levels of security in the options available to protect you.

But first, ask whether capital preservation is really the right goal for you.

If you anticipate needing 20% or more of your assets within a five year period, you should not have any exposure to the stock market. You need the confidence of knowing your money will be there when you need it. You cannot afford the kind of market volatility we are experiencing that could cause you to sell at a loss to pay living expenses.

You have a number of choices outside the stock market. As with all investments, you are rewarded for taking risk. Remember: The most secure choices will pay the lowest interest.

The liquidity crunch is having unprecedented ramifications in markets that were traditionally regarded as very safe. Many financial experts now regard only cash and debt secured by the full faith and credit of the U.S. government as really safe.