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Stocks will beat bonds and deliver annualized returns of 6% over the next decade, Goldman says

Goldman Sachs believes equities will outperform bonds by 6%. Its a prediction, so we have no idea whether its good, bad or spot on. However, when you get to think about why bonds are particularly poor, perhaps there is some substance in their prediction. Clearly, 6% is a number which may or may not be accurate but will equities outperform, the chances are yes. Of course, anyone can say that simply due to risk associated with bonds and equities.  You should get more if you choose equities because they are riskier than bonds.

But its more about what proportion of bonds do you favour especially when future nominal returns look so low.  Someone once said investing in bonds is like picking pennies up in front of a steam roller.  It may be riskier than you think.

All portfolios need lower-risk assets, your challenge is what assets do you use to give you lower risk?

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