Here’s a comparison of the historical returns of S&P 500 stocks, real estate, and fixed deposits (bonds/cash equivalents) over the last 20 years:
| Asset Class | Average Annual Return (Last 20 Years) | Key Insights |
|---|---|---|
| S&P 500 | ~10.4% (Including dividends) | Stocks have shown strong growth with high volatility and large swings during events like the 2008 financial crisis and the 2020 pandemic. The average return includes dividends. |
| Real Estate (U.S.) | ~5.5% (Median growth) | Real estate appreciated at a lower annual rate compared to stocks, but provides a stable, less volatile return. Returns can differ by region and are influenced by market dynamics such as supply and demand. |
| Fixed Deposits / Bonds | 2-4% (Varies by country) | Fixed income assets like government bonds offer low returns with minimal risk. In the current low-interest environment, these rates have been even more subdued. |
Over the last two decades, stocks, represented by the S&P 500, have offered the highest average annual return, though with more volatility. Real estate has shown a more stable but lower rate of return, while fixed deposits or similar low-risk assets like bonds have provided the least return, especially with inflation-adjusted rates.
These averages should be considered with the understanding that past performance doesn’t guarantee future results, and personal circumstances (taxes, fees, leverage, etc.) also play a crucial role in final returns
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