1. Stocks Are Riskier Than Bonds
It might be a popular belief that stocks are riskier than bonds, but it’s not true, said Scott Trench, vice president of operations at investment website BiggerPockets. However, it really depends on how you define “risk.” Stocks might be more volatile in the short term — what people are generally referring to when they call them riskier — but in the long run, they almost always generate bigger returns.
“For any investor with a long-term, 30-year-plus outlook, it is almost a statistical certainty that you will be less wealthy investing in bonds than in stocks,” he said. “It’s true that the price of stocks will likely fluctuate much more than bonds, as an asset class. However, the long-term growth of stocks far outstrips the long-term growth of bond investment returns.”
