Over the past 10 years, bonds have built a meaningful lead over stocks when comparing returns. But how often have bonds outperformed stocks over various historical periods, through all sorts of crises, political changes, recessions, etc.?
Consider the graphs below from Morningstar. They demonstrate multiple rolling periods (starting a new period each month). The first shows that when evaluating 5-year (60-month) periods, there are several stretches when bonds return more than stocks. But when the returns are measured over rolling 10-year (120-month) and 20-year (240-month) periods, the likelihood of making more money in bonds than in stocks, nearly disappears.
If you’re seriously committed to saving, investing and building a nest egg intended to support a vibrant, multi-decade retirement, 20 years is basically the minimum period of accumulating and growing your savings. Over these years of accumulating a life savings, a portfolio tilted toward stocks can make a big difference.
~ Brooks, Hughes & Jones, Partners in Wealth Management — Gary Brooks, CFP®, Allyn Hughes, CFP®, CLU, ChFC, Nancy Jones, CFP®
