In the U.S., studies of stocks vs. bonds typically use Treasury instruments as the bond investment. Currently, 1-year T-bill yields are 4.15% vs. about 5.6% for the highest-yielding 1-year bank CDs. I wonder what the spread has typically been. If, historically, investors have been able to find yields about 1% over Treasuries for investments of the same duration, and with FDIC protection (at least for the first $100K), that would argue for a higher allocation to fixed income using CD's than if Treasury bonds are used. One would need to shop around annually for the highest rates.
- posted
16 years ago