Should I Invest in Stocks or Bonds

This lesson covers the question of whether to invest in stocks or bonds. It is said that it depends on how risk-averse an investor is, but this is not a definite answer. The term “risk-free” is discussed, with the example of US Treasuries being considered as such. The investor must consider the expected returns from bonds and stocks before making a decision, taking into account the interest rate risk of bonds. The Schiller PE is a good indicator of expected stock returns and it is up to the investor to weigh the potential upside and downside of investing in the stock market against the steady stream of cash from a bond.