Are you wondering whether you should invest in bonds or stocks in 2011? I can’t tell you that you should load up on stocks and dump bonds this year.
First of all, there’s no evidence that any market analyst can predict the market returns consistently for each year. If you ask 1,000 market analysts, you can’t find anyone who gets it correct for each year. So, it’s not a good idea for you to load up on stocks or bonds based on what analysts think. We should know that all of them are just guessing.
Averagely, stocks should perform better than bonds in any given year. This is stocks are more riskier and investors should be rewarded with the potential returns over the years.
However, you should know that the returns for stock are not guaranteed. Think logically! If stock market can generate guaranteed returns of 20%, then there would be definitely no reason to have bonds.
No matter how, it’s advisable not to load the boat on stocks market as you don’t know what your retirement plan will be worth in the future. But, you should have some portion of your retirement money in guaranteed investments such as bonds.
The investment market is very huge and complex. For individual investors, you should always have a healthier way to view the stock and bond before investing. You need both at the same time to maintain the balance in order to serves as the fundamental building block for a prudent retirement portfolio.