The advantage of a 9.8 percent return from stocks over a 5 percent return from bonds may sound piddling to some, but consider this financial fable. If at the end of 1927 a modern Rip Van Winkle had gone to sleep for 60 years on $20,000 worth of corporate bonds, paying 5 percent compounded, he would have awakened with $373,584—enough for him to afford a nice condo, a Volvo, and a haircut; whereas if he’d invested in stocks, which returned 9.8 percent a year, he’d have $5,459,720. (Since Rip was asleep, neither the Crash of ’29 nor the ripple of ’87 would have scared him out of the market.)
