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stocks

A stock is nothing but a part-ownership of a company. It gives you a vote in the running of the same, and maybe even a dividend at the end of a financial year.

But stocks are also the metaphor for our economic and financial system, symbol of capitalism per se.

No other asset class is as much envied and feared at the same time. During great bull markets every one wants to be an owner of stocks, whilst in bear markets very few want to be associated with this most hazardous of all instrument, curse of all our savings and plaything of the super rich....

All these information are to little avail in order to reach a decision whether to own stocks, and if yes which and how to own them.

Fact: Over long periods of time stocks have been the best protection against inflation risk, and have delivered best returns by both dividends and price appreciation.

Fact: Stocks are risky, especially if you own stocks of very few companies, as companies can simply fold up, keel over, go under, sink and disappear. But there is a solution to this problem, as a part of this risk can be diversified away by owning broad baskets of different stocks.

Fact: Stocks pay less in dividends than bonds. But this has not always been the case, so it might change again, who knows?

Whether you should or could include stocks into your investments is a fair questions, and should be carefully considered.

But to all we know at the moment many people actually can not afford not to own stocks as part of their retirement savings.