According to a recent Gallup poll, only 16% of Americans believe that stocks are the best long-term investment. Surprisingly, 37% think real estate is the top choice, while 23% say it’s gold. Despite the perception, historical data shows that stocks have been the highest long-term earner among these options.
From 1980 to 2024, the S&P 500 returned an average of 12% per year, including reinvested dividends. In comparison, bonds grew an average of about 7% per year from 1980 to 2021, and gold grew at an average rate of 4.4% per year from 1980 to the end of 2023. Real estate returns are more complex to calculate due to variations in property types, locations, and market conditions.
However, it is estimated that residential real estate in the United States grew around 4.3% per year from 1967 to 2024. The S&P 500 outperforms other investments because it is composed of 500 of the largest U.S. companies, such as Apple, Amazon, and Microsoft.
Historical data favoring stock investments
As these companies grow alongside the economy, so does the value of the index. The diversity of the S&P 500 also helps mitigate risk and ensure long-term stability. The easiest way to invest in stocks is through an S&P 500 index fund, which tracks the performance of the index and charges very low fees, usually under 0.1%.
These funds can be accessed through brokerage accounts or retirement accounts like 401(k)s and IRAs. While stocks are the best long-term investment, it is important to maintain cash for emergencies and short-term savings. High-yield savings accounts offer competitive interest rates, providing a secure option to keep money accessible while earning interest.
Stocks may experience down periods, sometimes lasting years. However, they remain the best long-term investment for substantial returns. Real estate, gold, and bonds can complement an investment strategy, but stocks should form the core of a retirement portfolio.