Bonds vs. Stocks: 98 Years of Returns, Risk and When Each Wins
A stock is a slice of ownership in a company. A bond is a loan to a company or government that pays interest and returns your money at a set date. Over the 98 years from 1928 through 2025, U.S. stocks returned about 10.0% a year and 10-year Treasury bonds about 4.5% a year, but stocks fell in 26 of those years and bonds in 20, and the two did not usually fall together. This page puts the full record side by side, using Aswath Damodaran's annual returns data from NYU Stern, so you can see what each one has actually done and how a mix of the two behaved.
The Short Answer
- Stocks grow more, bonds swing less. From 1928 to 2025 the S&P 500 with dividends returned 10.0% a year; 10-year Treasuries returned 4.5% and 3-month Treasury bills 3.4%. Inflation averaged 3.0%.
- $100 invested at the start of 1928 grew to about $1,157,000 in stocks, $7,700 in 10-year Treasuries and $2,600 in Treasury bills by the end of 2025, before taxes and fees.
- Stocks had worse years. Their worst calendar year was −43.8% (1931). The worst year for 10-year Treasuries was −17.8% (2022).
- They rarely fell together. In the 26 years stocks lost money, Treasuries gained in 21. Both fell in only five years: 1931, 1941, 1969, 2018 and 2022.
- Time favors stocks, but not every decade. Stocks beat Treasuries in 85% of 10-year periods and in every 30-year period since 1928, yet they lost money over the ten years 2000 to 2009.
Money you need within a few years usually belongs in bonds or cash. Money you will not touch for decades has historically been better off mostly in stocks. Most people own both, in a proportion set by when they need the money.
The Key Differences
| Stocks | Bonds | |
|---|---|---|
| What you own | Part of a company | A loan to a company or government |
| How you get paid | Price gains and any dividends the company chooses to pay | Interest on a fixed schedule, then your principal back at maturity |
| If the issuer goes bankrupt | Last in line; shares are often wiped out | Paid before stockholders, though not always in full |
| Main risk | Large price drops that can last years | Default (for corporate bonds), rising interest rates and inflation |
| Return, 1928-2025 | 10.0% a year (S&P 500) | 4.5% a year (10-year Treasury) |
| Typical year-to-year swing | About 19 percentage points | About 8 percentage points |
The SEC describes a bond as "a debt security, like an IOU": you lend money for a set time, and the issuer promises interest and repayment of the face value at maturity. A stock gives you a share of ownership, which pays off through a rising price and dividends but promises nothing. That difference shows up in bankruptcy. The SEC notes that creditors, including bondholders, "all come before holders of the company's common stock", which is why shares of a bankrupt company are usually worthless.
Bonds carry their own risk. If you sell a bond before it matures and interest rates have risen, newer bonds pay more, so yours sells at a discount. That is what happened in 2022, when rates rose quickly and 10-year Treasuries lost 17.8% in a year. Held to maturity, a Treasury still pays back its face value.
Returns by Decade, 1928 to 2025
| Decade | S&P 500 | 10-year Treasury | 3-month T-bill | Inflation |
|---|---|---|---|---|
| 1930s | −0.9% | 4.0% | 1.0% | −2.0% |
| 1940s | 8.5% | 2.5% | 0.5% | 5.4% |
| 1950s | 19.5% | 0.8% | 2.0% | 2.2% |
| 1960s | 7.7% | 2.4% | 4.0% | 2.5% |
| 1970s | 5.9% | 5.4% | 6.3% | 7.4% |
| 1980s | 17.3% | 12.0% | 9.0% | 5.1% |
| 1990s | 18.0% | 7.4% | 5.0% | 2.9% |
| 2000s | −1.0% | 6.3% | 2.7% | 2.5% |
| 2010s | 13.4% | 4.1% | 0.6% | 1.8% |
| 2020-2025 | 14.9% | −0.6% | 2.8% | 4.0% |
Two decades stand out. In the 2000s, stocks lost money (−1.0% a year) while Treasuries returned 6.3%, because the decade began and ended with a crash. In the 1970s, neither beat inflation by much: high and rising inflation (7.4% a year) hurt stocks and bonds alike. Since 2020, bonds have done worse than cash, mostly because of 2022.
What Happened in the Bad Years
| Year | S&P 500 | 10-year Treasury |
|---|---|---|
| 1931 | −43.8% | −2.6% |
| 1937 | −35.3% | +1.4% |
| 1974 | −25.9% | +2.0% |
| 2002 | −22.0% | +15.1% |
| 2008 | −36.6% | +20.1% |
| 2022 | −18.0% | −17.8% |
In most stock crashes, Treasuries held up or rose, as investors moved to safety and interest rates fell. 2008 is the clearest case: stocks lost 36.6% and Treasuries gained 20.1%. 2022 was the exception that worried many investors, because inflation and fast rate rises hit both at once.
How Long Stocks Need to Win
| Holding period | Periods since 1928 | Stocks beat Treasuries | Worst stock return, a year |
|---|---|---|---|
| 1 year | 98 | 63 (64%) | −43.8% |
| 5 years | 94 | 72 (77%) | −12.7% |
| 10 years | 89 | 76 (85%) | −1.7% |
| 20 years | 79 | 78 (99%) | +2.4% |
| 30 years | 69 | 69 (100%) | +8.0% |
The longer you hold, the more often stocks come out ahead. The one 20-year period in which Treasuries won was 1929 to 1948, which began with the 1929 crash. Over ten years, stocks still lost money in five periods: the three starting in 1928, 1929 and 1930, and the two starting in 1999 and 2000. That is why money for a goal less than about five years away is usually kept out of stocks.
What a Mix Did
A portfolio of 60% S&P 500 and 40% 10-year Treasuries, rebalanced back to 60/40 each year, returned 8.3% a year from 1928 to 2025, compared with 10.0% for stocks alone. Its worst year was −27.3% (1931), compared with −43.8% for stocks alone. In 2008 the mix lost about 14%, less than half of the stock market's fall. You give up some long-run return for a smoother ride, which matters most when you are close to spending the money. See how to choose an asset allocation and when to rebalance.
Which Should You Own?
- Need the money within about 3 to 5 years (a house deposit, tuition): mostly bonds, Treasury bills or savings. A stock crash just before the date can take years to recover.
- Investing for 20 years or more (retirement in your 20s to 40s): mostly stocks, usually through a low-cost index fund or ETF. Every 30-year period since 1928 favored them.
- In between, or nearing retirement: a mix, with the bond share rising as the date gets closer. Target-date funds do this for you automatically; see how to choose a target-date fund.
- Buying individual bonds or stocks: Treasury notes pay interest every six months, and their interest is taxed by the federal government but not by states. Individual stocks add company-specific risk that a fund spreads out.
Current yields matter for bonds in a way they do not for stocks: a bond bought today will roughly earn its yield if held to maturity. Check the 10-year Treasury yield and the 30-year Treasury yield before deciding how much to hold, and see are bonds a good investment for today's numbers. Tools such as portfolio trackers and stock analysis tools help once you own both.
FAQ
Are bonds safer than stocks?
Usually, measured by how much they swing. From 1928 to 2025, 10-year Treasuries moved about 8 percentage points in a typical year against about 19 for stocks, and their worst year (−17.8% in 2022) was far milder than the stock market's worst (−43.8% in 1931). They are not risk-free: rising rates and inflation can cut their value.
Do bonds go up when stocks go down?
Often, but not always. In 21 of the 26 years stocks lost money since 1928, 10-year Treasuries gained. Both fell in 1931, 1941, 1969, 2018 and 2022.
What is the average return of stocks vs bonds?
From 1928 to 2025, 10.0% a year for the S&P 500 with dividends and 4.5% for 10-year Treasuries, compound averages before fees and taxes. After inflation, about 6.8% and 1.5%.
Have bonds ever beaten stocks over a long period?
Yes. Over 1929 to 1948 Treasuries returned 3.2% a year against 2.4% for stocks, and over 2000 to 2009 Treasuries returned 6.3% while stocks lost about 1% a year. No 30-year period since 1928 favored bonds.
Should I own stocks or bonds in retirement?
Most retirees own both: bonds or cash to cover the next several years of spending, and stocks for growth over a retirement that can last 30 years. The right split depends on your other income, such as Social Security or a pension.
Sources
- Aswath Damodaran, NYU Stern, Historical Returns on Stocks, Bonds and Bills: 1928-2025 (histretSP.xls, updated January 2026). Every return, decade and rolling-period figure on this page is from this file or our calculation from it.
- SEC Investor.gov, Bonds and Stocks
- SEC Investor Bulletin, Bankruptcy for a Public Company
- TreasuryDirect, Treasury Notes (interest every six months; no state or local tax)
This article is for general information and is not investment advice. Historical returns are for indexes, which you cannot buy directly; they exclude fees and taxes, and past performance does not predict future results. Figures checked against the sources above on 2026-10-23.
