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60 Don’t Make Me Say I Told You So

Over the past 20 years, from 1999 – 2019, small stocks led
the way, with an average annual total return of 9.3%. Large cap

stocks produced an average annual total return of 6.1% over
that time. Government bonds produced a total return of 7.1%

per year over that 20-year period, and treasury bills returned
1.6% per year.

While bonds produced a return that was slightly higher than

large cap stocks from 1999 – 2019, it’s important to remember
that bonds benefitted from a dramatic drop in interest rates
over that time. In addition to paying an income, bonds go up

and down in value over time, in response to interest rates rising

and falling. With interest rates declining over the last 20 years,
bonds not only paid an income, but they also increased in value
during that decline.

Bonds are unlikely to produce similar returns going forward,
and it’s extremely likely that, as interest rates rise in the future,

which is a virtual certainty, bonds will drop in value.

Chapter 3: You Must Have Growth In Your Portfolio