BlackRock CEO Larry Fink: Sitting scared costs you money

— -- As the largest asset manager, BlackRock has more than $3 trillion in assets under management — more than the Federal Reserve and more than the GDP of some small countries — and is on a new campaign to get money moving once again in the world. BlackRock CEO Larry Fink has been getting out the message about the challenges and opportunities of taking action with your money, rather than sitting on the sidelines. He says keeping money in cash and money markets is costing you more than you think. Our interview follows, edited for clarity and length.

Q: People have been afraid to take risk and have poured money into safe cash accounts, money market accounts and low-yielding bonds. Why is that so bad?

A: If you're focusing on your retirement, the compounding effect to get to the proper nest egg is very important. If you're 35 or 45 years old and you're earning zero interest because you have it in cash, it gives you a deeper hole to build your nest egg in the future. If you're trying to build a nest egg for retirement, you have to ask yourself, can you afford the cost of earning zero, and what does that mean over the course of 30 years? And if your horizon is truly 30 years, why are you worried about daily volatility or the noise of oil prices and other daily ups and downs? If you believe that the world is going to be operating, and will be larger in 30 years, you'd better start focusing on the cost of earning zero in money. There is a big cost to earning zero interest on your money.

Q: How should folks invest money that is sitting in a money market account?

A: You have to have a much longer-term viewpoint. First, you have to change your guidepost. Ask yourself, how much money do I need when I retire? You have to have a strong belief, if you're in good health, that you will live to probably your mid-80s. And if you're a couple who are in your 60s and in good health, statistically, one of the two of you will live to 92. So you need adequacy in your nest egg when you retire to meet those financial needs as you live longer. People today are preoccupied in trying to live a better, longer life. They may be exercising more, taking vitamins, having regular examinations. We do that because we want to live longer. We're so preoccupied with finding a lifestyle that allows us to live longer and more successfully, but we don't take that same horizon when we invest for our retirement. What I'm trying to suggest is once you start to say, I need X dollars in retirement, then you work backwards. You're not going to earn that with zero interest in cash. You're going to need some form of returns, and there are areas where you can earn 4%, 5%, 6% type of returns over a course of a long time, and that's generally shares of dividend-paying companies and other forms of credit such as high-yield and other products that will give you a higher return than cash. So if you needed, let's say, $40,000 pretax to live by or $55,000 pretax to live by, work backwards. Depending on your life, your age, how much money do you need to put away? What type of return do you need to earn to build that nest egg? And I think too few people are focusing on that.

Q: Are the best returns in stocks?