Should You Be Invested in Stocks or Bonds Right Now? Here's What History Says.
Your personal situation matters when trying to build an optimal portfolio.
Financial markets are in a period of major volatility with wild swings occurring for stock, bond, and commodity prices across the globe. The U.S. dollar is devaluing compared to foreign currencies at an aggressive clip with the looming threat of tariffs potentially disrupting global supply chains. Chaos seems to be the norm, especially with the rapidly changing policies coming from the Trump administration.
Heightened price movements and stock drawdowns can make you question your investment strategy. Should I be invested in stocks? Or should I flee for safe assets like bonds? You will hear varying opinions on this decision. To better understand proper portfolio allocation, let's look at historical data to illustrate the difference between stock and bond returns.
Stocks are the best performing asset class over the long term. Over the last 100 years, U.S. stocks have produced an annual return of around 10%. Adjusted for inflation, this is slightly lower but still a strong real return for anyone who has bought and held stocks for decades at a time.
