By Ellen Roseman

Shirley has a simple question: “Do you think an 86-year-old should be holding bank stocks? Do you think there is much risk to bank stocks?”

Here’s my answer, starting with the second question first.

There’s risk in holding any stock. You can lose money whenever pessimism about the economy or about specific sectors pushes stock prices down.

If you can’t afford to take any risk, you should stick to bank deposits and government bonds. Yes, the returns are low and you’ll lose ground to inflation. But your capital won’t be in danger of sharp, swift declines.

Canadian bank stocks are safer than most because they’re large, well capitalized and conservative in their business practices. They pay good dividends and have a history of increasing their dividends on a regular basis.

However, this is not a great time to hold bank stocks. The European debt crisis makes the outlook more challenging for the financial sector.

Only one of the Big Five Canadian banks has made money for shareholders in the past 12 months. TD has a positive return (just barely) at at 0.03 per cent since late October 2010.

Meanwhile, Royal Bank is down 13.77 per cent, Scotiabank is down 4.23 percent, CIBC is down 3.65 per cent and BMO is down 2.38 per cent in the same one-year period.

Is the banks’ winning streak in peril? Will they be able to maintain the same success in the future?

“The golden era for the Canadian banks has ended,” says portfolio manager Rob Wessel in an interesting article. He predicts that banks’ total returns of almost 14 per cent a year won’t be around any longer.

Declining tax rates, a favourable macro-economic backdrop and regulatory reform have driven Canadian banks’ growth over the past two decades. But only foreign expansion.will drive growth in the years to come.

“The next five to 10 years are unlikely to contain the same powerful tailwinds as the previous 20,” says Wessel of Hamilton Capital Partners, which manages funds for high net worth investors.

“Rather, an emphasis on foreign expansion will more likely introduce headwinds, making it more difficult for Canadian banks to generate the medium-term double-digit earnings growth to which investors have become so accustomed.”

If banks won’t generate growth of 10+ per cent a year, what will?

I’m a fan of utility and pipeline stocks, which I hold in my own accounts. I know they’re expensive, but they have the results to back their lofty price earnings multiples.

Enbridge Inc., the pipeline based in Calgary, has a one-year gain of 26.37 per cent. Inter Pipeline Fund has a one-year gain of 24.74 per cent.

“Boring utilities have become the sexy stocks,” said a recent blog post, pointing to a 13 per cent gain in the the S&P/TSX utilities index from Aug. 8 to Sept. 30 of this year.

So, should 86-year-olds own stocks? If they already have enough money to live on, why not? 

Holding stocks can help an older person pass along more money to the children and grandchildren. But instead of the Big Five banks, boring utilities may be a better bet for senior savers.