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Tuesday, March 17, 2009

Evaluating Investments - Question 5

Am I better off investing in stocks or bonds? Which is safer?

It depends upon your investment objectives – whether you are looking for short-term or long-term gains. If you look at the chart provided by Ibbotson Associates, you will see the performance of stocks and bonds over a 50-year period. Obviously, stocks have done much better.

Which are safer? Bonds used to be safer than stocks; but in 1994, the volatility of the bond market made bond funds less safe than stock funds.

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