Where has it been profitable to invest and invest money in the last 30 years?
Which major asset class has delivered the highest returns over the long term? How do returns from investments like bonds and real estate actually add up?
To put investment returns into perspective, this chart shows $100 gains across asset classes over the long term.
Comparison of asset class returns
Below we show the return on a $100 investment in major asset classes - from US stocks to gold - between 1970 and 2023:
| Year | S&P 500 Index | Corporate bonds | Gold | 10-year US Treasuries | Real estate | Cash |
|---|---|---|---|---|---|---|
| 1970 | 100$ | 100$ | 100$ | 100$ | 100$ | 100$ |
| 1980 | $226 | $181 | $1578 | $141 | $229 | $192 |
| 1990 | $823 | $741 | $1033 | $477 | $374 | $431 |
| year 2000 | $4060 | $1886 | $734 | $1067 | $536 | $682 |
| 2010 | $4656 | $4191 | $3760 | $1821 | $693 | $840 |
| 2020 | $16,890 | $8349 | $5059 | $2802 | $1155 | $891 |
| 2023 | $22,419 | $7775 | $5545 | $2286 | $1542 | $956 |
Numbers have been rounded. The S&P 500 includes dividends. Cash is represented by 3-month US Treasury bills. Corporate bonds are represented by Baa corporate bonds. Real estate is represented by the Case-Shiller Home Price Index.
As we can see, a $100 investment in the S&P 500 (including reinvested dividends) in 1970 would be worth an impressive $22,419 in 2023.
Not only were U.S. stocks the best-performing major asset class, but they also outperformed other investments by a significant margin. Consider how a $100 investment in corporate bonds would have grown to $7,775 over this period, which is 65% lower than an investment in the S&P 500 Index.
As for gold, by 2023 a $100 investment would be worth $5,545. By comparison, the S&P 500 has delivered much lower returns over these decades.
Real estate, another safe-haven asset, has returned an average of 5.5% annually since 1970, with the highest gains in the decade to 2020. Interestingly, a $100 investment in this asset class would only grow to $1,542 by 2023 due to slower price growth. during the 1980s and 2000s, influencing overall returns.
During both periods, the housing market crashed and the sector took years to fully recover. In fact, it took a decade after the global financial crisis for house prices to rise to their previous peak in 2006.