Stocks, Bonds, and Real Estate Asset Allocation

In addition to the cash dividends that the Board of Directors chooses to send out to the owners of the business every three months, there are two other things that will be responsible for driving your total return: the growth rate of your investments, and the valuation of those investments.

It is those last two things “growth rate of investments” and “valuation of those investments” that lead me to shy away from bonds, utility stocks, and REITs at this point in time. Right now, the ten-year treasury is only yielding 3%. Not only do rates like that not help you build wealth, but they actually make you poorer. You sit there collecting your 3%, pay your taxes on it, and then see your purchasing power decrease over time due to a long-term inflation rate in the 3-4% range. The point of investing is that you are setting aside capital so … Read the rest of this article!