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Finance For Dummies

Finance For Dummies offers personal finance information on investing, retirement investing, finance, insurance, credit cards, loans and more. Personal finance education is our goal.

Thursday, August 03, 2006

Stocks, Bonds, Treasury Bills and Inflation

As we have discussed the more risk taken over a long time horizon the greater reward. It is also to include inflation when looking at long-term (1925-2000) investing because it can have a dramatic effect on how you should invest. Small caps hiostorically return over 12%; large caps around 11%; Government bonds over 5%; and T-bills around 3.8%. During this same period inflation has averaged 3.1% per year. There fore, you must consider risk, return and inflation to make wise long-term decisions on your investments.


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