There are also datasets widely published by others, such as Yale economist Robert J. Shiller. Shiller found that, when you look at 10-year periods of Price/Earnings (P/E) data dating all the way back to 1871, the markets tend to rise when the average P/E is low, as it is right now. Conversely, when the average P/E values are high -- as they were in late 1999, and again in 2007 -- a decline in stock prices is much more likely.

There are obviously no guarantees that history will repeat itself. But if it does, the same data implies we could see real returns of 10% a year or more “for years to come,” as Shiller noted in a recent interview with Kiplinger’s Personal Finance. My own research seconds the general-market-increase theory, but I’m much more conservative in my expectations, and think that returns of 7% are more likely.

Perhaps what’s more important right now is that inflation typically accompanies growth -- and with a vengeance. And that means that investors who are sitting on cash “until the time is right” may have their hearts in the right place -- but they're relying on the wrong protection strategy.

My recommendation is a 4-part plan that can help lock in the expected returns you want, while also protecting your cash from the ravages of inflation.

Let’s take a close look at each of the 4 elements of this strategy:

1. First, protect your cash with Treasury Inflation Protected Securities (TIPs). Even though the trillions of dollars the Fed has injected into the system seem to be having some effect on the critically ill patient the US central bank is trying to fix, we’re likely to pay a terrible price in the future. Forget the hyperinflation scenario so many people are hyping at the moment. While that’s certainly possible, it’s not probable. However, what is likely is a dramatic realignment of the dollar and a general increase in worldwide living expenses.

US investors who primarily hold US assets may want to consider something as simple as the iShares Barclays TIPS Bond Fund (TIP) to offset this risk. The TIP portfolio is full of inflation-indexed securities, but it also offers a healthy 7.46% yield. If you’ve got international exposure, you may also want to consider the SPDR DB International Government Inflation Protected Bond ETF (WIP). It’s a collection of internationally diversified government-inflation-indexed bonds that provides similar protection. Make sure you talk with your tax advisor about both, though. Depending on your tax situation, you may find that, due to the tax liability on inflation-related accretion, these are generally best held in tax-exempt accounts.