I spent an hour or two today looking over the options on Vanguard. I currently have $ in the Vanguard 500 Index Admiral, which I chose because it has good 5 and 10 year returns (yes, I know, past performance...) and low expense ratios.
Now I have a chunk more to add, and I am considering diversifying, but my problem is, when I go back in time and look at returns long term, hardly anything ever beats stocks. I know, having been told again and again, to diversify to avoid risk, but, times when bonds beat stocks are so few and seldom, that I just don't see the point.
I guess I'd like some advice for a low-information investor. I am familiar with the 3-fund idea, but I still can't get around the lower returns that are built into that system, in return for greater supposed safety. How far in time do you have to go for this safety to really be any safer than just shooting for top returns on a large-cap fund, which seems pretty safe to me.
Obviously I am missing something, since it seems all of the smart people who understand this topic disagree with me. What is it? Please help.