On Forbes: The Price of Safety

September 9, 2011

How much are investors willing to pay for safety? In her latest post on the Forbes Intelligent Investing blog, Janet Brown looks at why stocks may now be a better bet than bonds.

This may be hard to fathom, Janet writes, given recent market’s swings of 1% to 4% a day and renewed worries about a U.S. recession. But the numbers show that stocks may now be a better place to put cash.

“The S&P 500 now yields 2.3%, while the 10-year Treasury’s yield at 2.1% is near historic lows. After 10 years, Treasury investors, assuming they can reinvest their coupon payments at 2.1%, will end up with about $23 in return for each $100 invested… If we consider that dividends increase by an average of 5% a year–as they have for the past half century–stock investors will earn $35 per $100 invested, even in a flat market.”

Click here to read the full post.

(To read all of Janet’s posts on the Forbes Intelligent Investing blog, click here).

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