There's a disclaimer that every mutual fund company in the country has to use in its sales literature: "Past performance is no guarantee of future results."

Keep that warning in mind as you study your investment options. The greatest stock-picking method in the world cannot predict the future. We can't know what the stock market is going to do tomorrow, let alone a year or ten years from now.

We can, however, hazard very educated guesses about all the markets. Based on more than a century of financial market analysis, we can reasonably predict some basic things -- that stocks will continue to perform better over the long-term than bonds, that small cap stocks will offer the best overall long-term returns of all the asset classes (types of assets: stocks, bonds, etc.), that U.S. Treasury securities will continue to be the safest investments available. But when we speak about return for the asset classes, we're always speaking in the past tense.

Comparison: Stocks, Bonds and Inflation:"Gentlemen prefer bonds," goes a well known saying.

That may be true, but then gentlemen are losing out. They'd be better off listening to Peter Lynch, the legendary Fidelity Magellan Fund manager, who says, "stocks are where the action is."

Indeed, historically stocks have offered the highest possible returns of all the asset classes. Ibbotson Associates, the Chicago-based consulting company, provides some statistics that demonstrate the high performance of stocks. Since 1926, the stocks that make up the S&P 500 (a listing of 500 commonly traded large cap stocks, including such titans as Monsanto, Microsoft, Campbell Soup and General Electric) have achieved an average annual growth rate of almost 12%. That's nearly double the rate for the next most historically lucrative investment choice, long-term corporate bonds, which have grown at about 6.5%.

The big decision in investing is between equity (stocks) and fixed income (bonds). But even within those two categories there has been great variety in return. Small cap stocks have historically offered the highest equity return. Similarly, corporate bonds have offered a higher return than government bonds. Treasury Bills have been pretty much the lowest earners, with a little more than 5% average annual return.

Find out how much asset classes have made over time:

Time Traveling Trader

When charting the return on asset classes, you should also look at the rate of inflation. Inflation is what makes something that used to cost $10 a few years ago cost $12 today, meaning that your money doesn't buy as much as it used to. If you want to have enough money to live well in your retirement, your investment return has to compensate for the inevitably higher prices that will exist 10, 20 or 30 years from now.

Even Treasuries have historically provided some protection against inflation. So even the most conservative investment account possible has beaten hiding your money under your mattress. But you're probably not going to whip inflation by much unless you invest in higher-return investments. That means taking more risk.

Here's a purely hypothetical scenario put together by the Securities Industry Association: If you invested $1,000 in a cash account (such as a CD) yielding 5%, you could grow your investment to $1,629 over ten years. But assuming a 3% inflation rate (over the past 70 years, inflation has averaged more than 4% per year), this sum would actually be worth only $1,201. At 4% inflation, you would have only $1,083 -- not a lot to show for ten years' worth of investing.

The moral of this story? Every day your money is worth a little less than it was the day before. Whether you call yourself a saver or an investor, you've got to keep moving just to stay in place. And if you want to get ahead, you really have to run.

There's a disclaimer that every mutual fund company in the country has to use in its sales literature: "Past performance is no guarantee of future results."

Keep that warning in mind as you study your investment options. The greatest stock-picking method in the world cannot predict the future. We can't know what the stock market is going to do tomorrow, let alone a year or ten years from now.

We can, however, hazard very educated guesses about all the markets. Based on more than a century of financial market analysis, we can reasonably predict some basic things -- that stocks will continue to perform better over the long-term than bonds, that small cap stocks will offer the best overall long-term returns of all the asset classes (types of assets: stocks, bonds, etc.), that U.S. Treasury securities will continue to be the safest investments available. But when we speak about return for the asset classes, we're always speaking in the past tense.

Comparison: Stocks, Bonds and Inflation:"Gentlemen prefer bonds," goes a well known saying.

That may be true, but then gentlemen are losing out. They'd be better off listening to Peter Lynch, the legendary Fidelity Magellan Fund manager, who says, "stocks are where the action is."

Indeed, historically stocks have offered the highest possible returns of all the asset classes. Ibbotson Associates, the Chicago-based consulting company, provides some statistics that demonstrate the high performance of stocks. Since 1926, the stocks that make up the S&P 500 (a listing of 500 commonly traded large cap stocks, including such titans as Monsanto, Microsoft, Campbell Soup and General Electric) have achieved an average annual growth rate of almost 12%. That's nearly double the rate for the next most historically lucrative investment choice, long-term corporate bonds, which have grown at about 6.5%.

The big decision in investing is between equity (stocks) and fixed income (bonds). But even within those two categories there has been great variety in return. Small cap stocks have historically offered the highest equity return. Similarly, corporate bonds have offered a higher return than government bonds. Treasury Bills have been pretty much the lowest earners, with a little more than 5% average annual return.

Find out how much asset classes have made over time:

Time Traveling Trader

When charting the return on asset classes, you should also look at the rate of inflation. Inflation is what makes something that used to cost $10 a few years ago cost $12 today, meaning that your money doesn't buy as much as it used to. If you want to have enough money to live well in your retirement, your investment return has to compensate for the inevitably higher prices that will exist 10, 20 or 30 years from now.

Even Treasuries have historically provided some protection against inflation. So even the most conservative investment account possible has beaten hiding your money under your mattress. But you're probably not going to whip inflation by much unless you invest in higher-return investments. That means taking more risk.

Here's a purely hypothetical scenario put together by the Securities Industry Association: If you invested $1,000 in a cash account (such as a CD) yielding 5%, you could grow your investment to $1,629 over ten years. But assuming a 3% inflation rate (over the past 70 years, inflation has averaged more than 4% per year), this sum would actually be worth only $1,201. At 4% inflation, you would have only $1,083 -- not a lot to show for ten years' worth of investing.

The moral of this story? Every day your money is worth a little less than it was the day before. Whether you call yourself a saver or an investor, you've got to keep moving just to stay in place. And if you want to get ahead, you really have to run.