Today’s Chart of the Day comes from @brianferoldi on Twitter who does a great job of making complex things easy to understand.
The chart shows that in the short term, cash and bonds have the least amount of risk and stock have the highest. However, over the long term, it is exactly the opposite.
Why? Not only do cash and bonds offer a lower return, their returns are further eaten away by inflation. Stocks are riskier in the short term, but over the long run offer higher returns for that risk and are inflation proof.