Which Investments Have the Highest Historical Returns? (2024)

The U.S. stock market has long been considered the source of the greatest returns for investors, outperforming all other types of investments including financial securities, real estate, commodities, and art collectibles over the past century.

Whether stocks are the best investment depends on the historical timeframe in which returns are studied. For individual investors, choosing where to invest for the highest returns also depends on their own investment horizons. The higher volatility of stock prices means that shorter investment time periods carry greater risk.

Key Takeaways

  • The U.S. stock market is considered to offer the highest investment returns over time.
  • Higher returns, however, come with higher risk.
  • Stock prices typically are more volatile than bond prices.
  • Stock prices over shorter time periods are more volatile than stock prices over longer time periods.
  • During shorter time periods, the market doesn't get the chance to recover from the economic events and conditions that can affect prices and returns.

Long-Term Returns From Stocks

The stock market has proven that it produces higher gains over long time periods compared to bonds. For example, one hundred dollars invested in the (S&P 500) in 1928 would have been worth more than $700,000 by 2021. In comparison, the same $100 invested in 10-year Treasuries for the same time period would have been worth only a little more than $8,500.

Stock Holding Periods Matter

Of course, not everyone holds the same stocks for many decades. Plenty of people lose money in the market in the shorter term. The key to capturing high returns from the U.S. stock market is to invest for the long term. That means letting your money remain invested while waiting out short-term volatility.

For example, the S&P 500 is far more volatile over any 12-month period than longer term. That means you face a greater risk of losing money during a period of one year (should you sell). Stocks tend to fall sharply just prior to and during economic recessions. Time the market poorly and your losses could be painful.

Stretch the holding period from 12 months to five years and you’re more likely to make money. Between 1945 and 1995, only a few five-year periods would have resulted in a loss in the S&P 500. A 10-year holding period performed even better, with returns averaging about 13%—and zero negative returns. So the longer the holding period, the more likely you are to make money.

Have a look at these numbers. From 1928 to 2021, treasury bonds rose in 76 of those years while stocks rose in 69. This reflects the short-term volatility the stock market experiences despite rewarding investors with higher returns than the bond market over the long term.

The shorter the holding period, the greater the risk of losing money in more volatile markets.

Stocks vs. Commodities in Recent Years

Despite the burst of the Dotcom Bubble in 2001 and the global financial crisis of 2008, stocks have produced solid gains over the past two decades, as well.

However, from 1999 to 2018, the S&P 500 was outperformed by real estate investment trusts (REITs), gold, and oil. During that time, REITs gained 9.9% a year, gold gained 7.7%, and oil gained 7%. The S&P 500 rose 5.6% per year.

These numbers point not only to the challenge of volatility but perhaps also to the wisdom of diversification.

Stocks vs. Housing

Many people consider a home an excellent long-term investment. Home prices have risen steadily over time, particularly in recent decades and most dramatically during the build-up of the housing bubble that peaked in 2005.

However, over the longer term, the return is less impressive. Between 1890 and 2015, after accounting for inflation, U.S. home prices rose less than 1% annually. That's just a fraction of the rise in the Dow Jones Industrial Average.

Why Does the U.S. Stock Market Offer Solid Returns Over Time?

The stock market represents U.S. companies that are committed to building profits and sharing them with their investors. In addition, the U.S. upholds an economic system that allows the business community to thrive. As public businesses grow, so should the returns offered to long-term investors.

What's an Example of a Company With Good Historical Returns?

Famously, Warren Buffett has been a committed long-term investor in the U.S. stock market through his company, Berkshire Hathaway. From 1964 to 2021, his stock market investment choices have returned an astonishing 3,641,613%.

How Does Being a Long-Term Investor Help Build Returns?

A key to building high stock market returns is to let your portfolio weather the periods of price drops due to economic events that are bound to happen over time. Although portfolio values can decrease, investors won't realize an actual loss during these periods unless they sell their investment(s). Simply by holding on to investments during rough market patches, you give them the opportunity to recover to previous levels and grow even more in value.

Which Investments Have the Highest Historical Returns? (2024)

FAQs

Which Investments Have the Highest Historical Returns? ›

The U.S. stock market is considered to offer the highest investment returns over time. Higher returns, however, come with higher risk. Stock prices typically are more volatile than bond prices.

Which investment has the highest returns? ›

Treasury Bills. The Government of India issues Treasury Bills to raise funds for up to 365 days. It is considered an investment with the best returns. Since the government gives these, they are considered very safe.

What is the safest investment with the highest return? ›

Here are the best low-risk investments in April 2024:
  • High-yield savings accounts.
  • Money market funds.
  • Short-term certificates of deposit.
  • Series I savings bonds.
  • Treasury bills, notes, bonds and TIPS.
  • Corporate bonds.
  • Dividend-paying stocks.
  • Preferred stocks.
Apr 1, 2024

Where can I get 10 percent return on investment? ›

Summary of the best investments with 10% ROI
  • Private credit.
  • Individual stocks.
  • Real estate.
  • Fine art.
  • Debt.
  • A business.
  • Private startups.
  • Cryptocurrencies.
Jan 4, 2024

What is the 20 year return of the stock market? ›

Stock Market Average Yearly Return for the Last 20 Years

The historical average yearly return of the S&P 500 is 9.74% over the last 20 years, as of the end of February 2024. This assumes dividends are reinvested. Adjusted for inflation, the 20-year average stock market return (including dividends) is 6.96%.

How to invest $100,000 for quick return? ›

If you want to put $100,000 into a short-term investment, here are six options worth considering:
  1. High-Yield Savings Account. ...
  2. Money Market Funds. ...
  3. Cash Management Accounts. ...
  4. Short-Term Corporate Bonds. ...
  5. No-Penalty Certificates of Deposits (CD) ...
  6. Short-term U.S. Government Bonds.
Mar 7, 2024

Where can I get 12% interest on my money? ›

Where can I find a 12% interest savings account?
Bank nameAccount nameAPY
Khan Bank365-day, 18-month and 24-month Ordinary Term Savings Account12.3% to 12.8%
Khan Bank12-month, 18-month and 24-month Online Term Deposit Account12.4% to 12.9%
YieldN/AUp to 12%
Crypto.comCrypto.com EarnUp to 14.5%
6 more rows
Jun 1, 2023

What investment is 100% safe? ›

High-yield savings accounts

A high-yield savings account is the safest investment you can find that still offers a modest return. A savings account is basically just like a bank account, except with a higher interest rate. Many banks and financial institutions offer these types of accounts.

Should a 70 year old be in the stock market? ›

If you're 70, you'd look at sticking to 40% stocks. Of course, there's wiggle room with this formula, and it's really just a way to get started. And for many older investors, a 50-50 split of stocks and bonds is what's preferred throughout retirement, and that's fine, too.

Where should I keep my money to get the highest rate of return? ›

Long-term certificates of deposit. Overview: Certificates of deposit, or CDs, are issued by banks and generally offer a higher interest rate than savings accounts. And long-term CDs may be better options when you expect rates to fall, allowing you to keep your money earning higher rates for years.

How to turn 10K into 20K fast? ›

How to Turn 10K into 20K Fast?
  1. Flip stuff.
  2. Start a blog.
  3. Invest in real estate with EquityMultiple.
  4. Start an online business.
  5. Write an email newsletter.
  6. Help others learn with online courses and webinars.
Apr 8, 2024

What's the best investment right now? ›

11 best investments right now
  • High-yield savings accounts.
  • Certificates of deposit (CDs)
  • Bonds.
  • Money market funds.
  • Mutual funds.
  • Index Funds.
  • Exchange-traded funds.
  • Stocks.
Mar 19, 2024

How long do you have to hold stock to avoid tax? ›

You may have to pay capital gains tax on stocks sold for a profit. Any profit you make from selling a stock is taxable at either 0%, 15% or 20% if you held the shares for more than a year. If you held the shares for a year or less, you'll be taxed at your ordinary tax rate.

How much money do day traders with $10000 accounts make per day on average? ›

With a $10,000 account, a good day might bring in a five percent gain, which is $500. However, day traders also need to consider fixed costs such as commissions charged by brokers. These commissions can eat into profits, and day traders need to earn enough to overcome these fees [2].

What stock pays the highest dividend? ›

20 high-dividend stocks
CompanyDividend Yield
Franklin BSP Realty Trust Inc. (FBRT)11.60%
Angel Oak Mortgage REIT Inc (AOMR)11.58%
Altria Group Inc. (MO)9.79%
Washington Trust Bancorp, Inc. (WASH)9.16%
17 more rows
7 days ago

What is the average annual return if someone invested 100% in stocks? ›

The average stock market return is about 10% per year, as measured by the S&P 500 index, but that 10% average rate is reduced by inflation.

Which stock gives highest return in 1 year? ›

1 Year Based Return Stock
S.No.Name1Yr return %
1.Swadeshi Polytex521.12
2.Ksolves India83.92
3.Remedium Life132.03
4.Infronics Sys.75.63
23 more rows

Which investment gives highest return with low risk? ›

Best Low-Risk Investments With High Returns
  • High-Interest Savings Account. ...
  • Annuities. ...
  • Money Market Mutual Fund. ...
  • Municipal Bonds. ...
  • Certificate of Deposits. ...
  • Debt-focused Unit Linked Insurance Plans (ULIPs) ...
  • Treasury Bills. ...
  • Fixed Deposits.
Jan 29, 2024

Top Articles
Latest Posts
Article information

Author: Carlyn Walter

Last Updated:

Views: 6085

Rating: 5 / 5 (70 voted)

Reviews: 93% of readers found this page helpful

Author information

Name: Carlyn Walter

Birthday: 1996-01-03

Address: Suite 452 40815 Denyse Extensions, Sengermouth, OR 42374

Phone: +8501809515404

Job: Manufacturing Technician

Hobby: Table tennis, Archery, Vacation, Metal detecting, Yo-yoing, Crocheting, Creative writing

Introduction: My name is Carlyn Walter, I am a lively, glamorous, healthy, clean, powerful, calm, combative person who loves writing and wants to share my knowledge and understanding with you.