Historically, stocks have provided higher returns than bonds, certificates of deposit (CDs), and other fixed-income investments. According to data from Ibbotson Associates, which has been tracking investment returns since 1926, stocks have provided an average annual return of around 10%, while bonds have provided an average annual return of around 5%. However, it’s important to note that past performance does not guarantee future results and that the stock market can be volatile in the short term.
That being said, stocks are generally considered to be riskier than bonds and other fixed-income investments because their value can fluctuate more rapidly in response to changes in the market. For this reason, it’s important to carefully consider your risk tolerance and investment goals before investing in stocks or any other type of investment. A financial advisor can help you determine the right mix of investments for your individual needs and goals.
Here are some additional statistics on historical investment returns:
- According to data from Morningstar, the S&P 500 index, which is a commonly used benchmark for the U.S. stock market, has provided an average annual return of around 10% over the past 30 years (as of 2021).
- Over the past 10 years (as of 2021), the best-performing asset class was U.S. large-cap stocks, which provided an average annual return of around 14%, according to data from J.P. Morgan Asset Management. The worst-performing asset class was commodities, which provided an average annual return of around -5%.
- According to data from Vanguard, U.S. bonds have provided an average annual return of around 5% over the past 30 years (as of 2021). This includes a mix of government bonds, corporate bonds, and other fixed-income securities.
- Real estate has also historically provided solid returns, with data from the National Council of Real Estate Investment Fiduciaries showing an average annual return of around 9% for U.S. commercial real estate over the past 20 years (as of 2021).
It’s important to remember that these statistics are based on historical performance and do not guarantee future results. The returns of different investments can vary widely from year to year, and there is always risk involved in investing. It’s important to carefully consider your individual financial situation and goals before making any investment decisions.