Face the ugly truth about returns

Bonds used to yield 14%, risk free. I know, imagine that today. At that time, bonds offered a risk-free yield some 10% higher than the risky yield on equities of between 4% and 6%.

Former Fed chairman Alan Greenspan raised interest rates to pre-empt, rather than respond to, inflation. From that moment, inflation, and the long-term trend in interest rates, began to fall – and they are still falling. Over the past 30 years the yield on bonds has dropped from 14% to 1% while the equity market yield, including franking, has remained between 4% and 6%. As it stands now, equities