True, you probably still wouldn’t have seen good returns from bonds – that’s maths – but annualised small losses from bonds may have buffered huge declines in the stock market.
Bonds are back
Today’s expected returns for bonds are much healthier anyway.
The yield-to-maturity on a ten-year gilt is 4.5%. Lend the government money for three decades and a 30-year gilt will pay you 5.2% annualised for doing so.
Of course you have to account for inflation, but in theory that should be around 2%. If you’re not convinced that will hold then an index-linked gilt of the same duration will deliver a 2% real return, if held to maturity.
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