StockMarketPerspectiveStocksvs.Bondsvs.Inflation.pdfVIP

Stock Market Perspective: Stocks vs. Bonds vs. Inflation Standard investing “wisdom” says that most Enough of the ruminations; let’s take a look at portfolios should have a substantial portion in what actual performance data show. The first stocks because that is the best way to earn a issue is what is meant by the long term. I’ll use “real” return, one that is more than inflation. 20 years although there is nothing special about Also, some part of the portfolio should be in that number. To some extent, it is a matter of bonds to reduce the convenience since the risk from owning Are stocks or bonds the better long-term Investors FastTrack stocks and to provide a holding? Owning them at the right times total return mutual stream of income is more important than the answer. fund data that I greater than what frequently use starts in stocks can produce when one needs to spend, late 1988. A useful feature of the 1989-2008 rather than reinvest, the income. The overly twenty-year period is that it is almost evenly simplistic (since it ignores investors’ financial split on an annual basis between the last secular positions and eventual needs) rule one often bull market (1989-99, 11 years) and the current sees or hears is that the stock percentage should secular bear (2000-08, 9 years). be one’s age subtracted from 100, or sometimes 110 is given. Vanguard1 has some funds that can be used in the analysis and have been in existence for the The assumption behind that rule and the entire period. I will look at three of them. One general advice is that over the “long term” is the original index fund, the Index 500 Fund, stocks will outperform bonds and inflation by a whose ticker symbol is VFINX. That fund significant margin. Recently, I have seen some closely replicates the performance of