Are Stocks Better Than Bonds?

The constant dilemma among average investors: Are common stocks a better investment than the ownership of bonds?

There’s no definitive answer and anyone who gives you one without further detailed explanations is inexperienced and wrong.

Just generally speaking, there are less erratic, less sharper downturns with bonds, so you have smoother returns. And bonds do produce more income than do common stocks.

Moreover, the use of duration principles and reinvested dividends in a low-cost bond mutual fund or ETF will help take care of erratic interest rate effects on bond holdings.

While stocks produce potential growth of principal over the years, this is not a simple goal for older investors, or any investors who are faced with a hyper-inflated economy. ( See the Earl J Weinreb NewsHole® comments.)