Bank Deal: Earn 1.00% APY on an FDIC-insured savings account at Barclays Bank.
While paging through the latest issues of Forbes and Money, I noticed something amusing… Both magazines were chock full of advice on how to navigate the current economy with your finances intact. No surprise there. What surprised me was that the two publications were offering completely opposite advice.
Invest in bonds!
Of course, this isn’t the first time we’ve heard this argument… In fact, I wrote earlier this week about the performance of stock vs. bonds when I highlighted Richard Arnott’s work showing that stocks can underperform bonds for significant periods of time.
Invest in stocks!
In contrast, Money sliced and diced the numbers differently and came to an entirely different conclusion. In fact, in an article entitled “Why Buy Stocks if Bonds are on Top?” author Paul Lim argued that:
“In all 880 rolling 10-year spans since the end of 1925… bonds [only beat stocks] 17% of the time.”
Moreover, lengthy periods during which bonds have outperformed stocks (such as we’re currently experiencing) have proved to be “great buying opportunities for … patient and value-minded [investors].”
The way forward
So which is it? Should you be focusing on your investments on stocks or bonds?
My advice is to ignore the noise. Develop an investment strategy, including a well-defined asset allocation plan, and then stick to it.
Remember… Magazines exist for one reason: to sell copies. Don’t look to them for detailed investing advice.
- How to Become a Millionaire
- How to Get Out of Debt
- The Best Dollars I've Ever Spent
- How Our Estate Plan is Structured
- How We Paid Our Mortgage In Less than 10 Years
- Money Making Ideas
- How to Manage Your Asset Allocation with Multiple Accounts
- Consumption Smoothing - Save While the Saving's Good
- How to Save on Groceries
- How Much Life Insurance Do You Need?
- Eleven Great Books About Money
- Dave Ramsey is Bad at Math (693)
- Dish Network Customer Service SUCKS (536)
- $8,000 Homebuyer Tax Credit (429)
- Pay Off Mortgage Early or Invest? (424)
- How to Claim the First-Time Homebuyer Tax Credit (352)
- Termite Control: Sentricon vs. Termidor (329)
- How Much Should You Pay a Babysitter? (286)
- Ethanol Blended Gas = Lower Mileage? (272)
- Reduced Credit Limits? Share Your Experience (256)
- $15,000 Homebuyer Tax Credit (242)
- Buying Furniture off the Back of a Truck (235)
- Will Mac OS X Lion Kill Quicken 2007? (191)