I commented in December 2018 on how the compounded interest on a 10Y gilt beat the total return on a FTSE portfolio from the beginning of this century to 31 March 2020.
The updated chart above shows the same effect, but with the growth in the bond caused by the fall in interest rates over the 20 year period.
Such growth on average – and over the very long term – will be zero. There will be periods when interest rates fall, so that gilt prices rise, and periods when they rise, so that gilt prices fall. The current period looks unprecedented (but I haven’t checked).
Including that growth, we see that bonds beat stocks by a very long way.
But don’t forget, also, that what goes up can go down. If we have a dose of inflation, and inflation expectations get embedded in the system, gilts will collapse in value, and stocks (which have inbuilt inflation protection over the long term) will recover.
Possibly.