Returns on stocks, bonds and treasury bills since 1.928

Graph with the distribution of the returns of stocks, bonds and treasury bills of the United States from 1.928 to the present:

Returns on stocks, bonds and treasury bills since 1.928

Returns on stocks, bonds and treasury bills since 1.928

In my opinion, from this graph we can draw the following conclusions:

  • The stock market has been much more volatile and more profitable than fixed income in general.
  • Long-term bonds have been more volatile and also more profitable than short-term bonds.
  • As time passes, volatility decreases.

In short, if we are able to withstand short-term volatility in stocks, we can achieve higher returns in the long term. Of course, this requires nerves of steel, since not everyone is able to remain stoic while the prices fall 50%.

Source:

Visualizing Economics