Cirrus Logic, Inc. (CRUS), Apple Inc. (AAPL): Three Guarantees for the Stock Market Today

Guaranteed less attractive alternatives
Still, looking at the numbers above might have you deciding to forgo the stock market today, seeing it as too unpredictable. You might find yourself leaning toward other options, such as bonds or CDs or real estate.

Think twice about them, though. It is smart to diversify your portfolio, but there’s a good chance that stocks will boost it the most over the long run. Consider CDs. They do offer virtually guaranteed returns, but good luck finding interest rates that will beat inflation’s long-term annual average of 3%. Most five-year CDs are yielding much less than 2%.

Want bonds? Check out these statistics from Wharton Business School professor Jeremy Siegel, reflecting on how often stocks outperformed bonds over various rolling periods between 1871 and 2006:

Source: Jeremy Siegel, Stocks for the Long Run.

Real estate? According to data from the National Association of Realtors, real estate, on average, has grown by about 5.5% annually over many decades. That’s just an average, though, as returns can vary widely depending on where and when you buy and sell. It’s also a smaller average than the stock market’s long-term annual average, which is close to 10%.

There’s a lot to like about the stock market today, and it makes good sense for most people to invest at least some of their nest eggs in it. But they should do so with their eyes open, aware of the important guarantees above.

The article 3 Guarantees for the Stock Market Today originally appeared on Fool.com.

Longtime Fool contributor Selena Maranjian, whom you can follow on Twitter, owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Cirrus Logic.

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