Twenty years is probably a suitable investment horizon for most working people. But even if you're retired and most of your biggest bills lie behind you, you may well need to keep your savings growing for another 10 years or more. So you should know that Ibbotson also concluded that stocks beat out bonds in 86 percent of the 10-year periods between 1926 and 1995, and the smallest stocks outshone all other investments in 60 percent of those periods. Stocks beat out investments like bonds and money markets . . . Because, as you probably also know, there's no free lunch.
Higher returns come with greater risks.
That's the curse of an efficient market. During certain months, years, even decades, the small-stock group lagged giants like Intel Corp. and Nike. And for the entire period, the triple-digit growth of a few stars pulled up a large number of stocks that went nowhere or failed altogether. In short, small stocks are risky. Pick the wrong one or the wrong time to buy it, and you can kiss part of your nest egg goodbye.