At times, the safety of bonds may seem far more tempting to investors than the perils of higher-returning -- but far riskier -- stocks. However, there may be a way for risk-averse investors to keep their nest eggs relatively safe, yet still enjoy bond-beating growth.
Financial columnist Felix Salmon recently suggested that in some cases, bonds can't be bested. "If you've got a nest egg which you want to keep safe for retirement," he wrote, "then investing it in the highest-yielding TIPS you can find is probably as good a strategy as any."
Still, Salmon concedes that not all of us have a nice pile of money ready and waiting for our golden years. "On the other hand, if you don't have enough money for retirement and you need serious positive returns on your investment, then you're going to have to start speculating." And if you're going to risk your money, history suggests that stocks, not bonds, give you the best chance at higher returns.
Bonds vs. stocks
According to research from stock expert Jeremy Siegel, in any given one-year holding period, stocks beat bonds about 60% of the time. Over five-year periods, stocks won out 70% of the time. Over 20-year periods, stocks beat bonds 95% of the time.
That said, you don't have to bet all your money on risky rocket stocks to earn respectable growth. Solid blue chips such as Johnson & Johnson
It's tough to gain the growth you need for your nest egg without taking on at least a little risk. But a healthy portfolio of stable, sturdy, lower-risk stocks can give you a level of safety much closer to bonds' -- and long-term growth that most bonds just can't match.
How risky are you? Tell us about your asset allocation mix in the comment box below.
Longtime Fool contributor Selena Maranjian owns shares of all the companies mentioned above. Google and Intuitive Surgical are Motley Fool Rule Breakers recommendations. Johnson & Johnson and Procter & Gamble are Motley Fool Income Investor picks. Motley Fool Options has recommended buying calls on Johnson & Johnson. The Fool owns shares of Procter & Gamble. Try any of our investing newsletter services free for 30 days. The Motley Fool is Fools writing for Fools.