Bonds at 7 percent could beat the stock market. Here’s when to make the switch.

Quick Read

• SPDR S&P 500 ETF (SPY) has returned 261% over the past 10 years and 27% in the trailing year, but sequence risk means a market drawdown in year four wipes out the value of needing money for a planned purchase in five years. With 30-year Treasuries yielding 5.03% and investment-grade corporate bonds approaching 6.5% to 7.5%, bonds now offer risk-adjusted returns that rival historical equity returns without requiring market cooperation.

• Bond yields have narrowed the gap with expected stock returns to historically tight levels, making fixed income a serious weight against equities for investors with defined time horizons and planned purchases rather than 20+ year horizons.

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Every investor eventually faces the same question: when does the certainty of a bond beat the upside of a stock? Evan from the Investing for Beginners Podcast laid out a clean answer, and the math right now is closer than most people realize.

On a recent episode, Evan said, “if I was able to get, you know, 6.5%, 7%, 7.5% off of a bond, that’s creeping pretty dang close to something like an expected market return.” That is the whole thesis in one sentence. When a guaranteed coupon starts approaching what equities have historically delivered, the risk-adjusted choice gets interesting fast.

Where yields actually sit today

We are not at 7% yet, but the curve is climbing. As of May 12, 2026, the 30-year Treasury yields 5.03% and the 20-year yields 5.02%. The 10-year sits at 4.42%, in the 87th percentile of its 12-month range. Investment-grade corporates layer a spread on top, which is how Evan’s 6.5% to 7.5% scenarios start to materialize.

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Inflation is cooperating. April CPI came in at 332.4, with the Fed funds upper bound holding at 3.75% since December 12, 2025. Real yields on 30-year TIPS are running at 2.74%, meaning long bonds are paying genuine purchasing power, not just inflation offsets.

The certainty premium

SPDR S&P 500 ETF Trust (NYSEARCA:SPY) has returned 261% over the past 10 years and 27% in the trailing year. Stocks have crushed bonds. The catch is sequence risk. If you need money in five years for a house down payment, an average return means nothing when the drawdown shows up in year four. The VIX at 18.38 is reminding everyone that calm markets do not stay calm.

Evan’s answer is CD laddering. “Put your money into a bunch of different CDs that will mature at different points in the future” so cash becomes available at 1, 3, and 5 year intervals. For a planned purchase, bonds let you “lock in that rate and be absolutely certain what that money is going to mature into at X date.”

Andrew’s 20-year rule

Co-host Andrew Sather’s framework is simpler: if you need the money within 20 years and are closer to retirement, current yields make fixed income worth serious weight against equities. I have been studying the bond market for over a decade, and the gap between long Treasuries and expected equity returns has rarely been this narrow without an inversion warning.

When to flip the switch

The trigger is personal, not a calendar date built around it. If a bond yield locks in your retirement number without needing the S&P to cooperate, the math has done its job. Watch the long end of the curve, watch corporate spreads, and decide whether certainty is worth more than upside for the dollars you cannot afford to lose.

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