Historical Average Investment Return By Asset Class

The average annual return for U.S. stocks over the last 40 years was 11.5%, and no other major asset class came close. Use the interactive returns table to switch between 1, 5, 10, 20, 30 and 40-year periods or the full stretch since 1928, see returns before or after inflation, and see what $10,000 would have grown to. All periods end December 31, 2025, the latest full year of data.

Knowing these numbers helps you set realistic expectations and pick an asset allocation that fits your timeline. A 22-year-old saving for retirement and a 60-year-old drawing down savings should not hold the same mix, and the data shows why.

What Is The Average Annual Return By Asset Class?

U.S. stocks returned 11.5% a year over 40 years. Real estate, bonds, gold and cash all trailed.

Over the 40 years from 1986 through 2025, U.S. large-cap stocks returned 11.5% a year, followed by REITs at 9.4%, U.S. small-cap stocks at 9.2% and international developed stocks at 8.0%. Gold returned 6.7%, U.S. bonds 5.5%, 10-year Treasury bonds 5.4%, U.S. home prices 4.4% and cash in Treasury bills 3.2%, while inflation averaged 2.8%.

Each figure is a compound annual growth rate (CAGR), the steady yearly rate that turns the starting balance into the ending balance. CAGR runs lower than a simple average of yearly returns because losses hurt more than gains help, which we explain in our article on average annual return vs. compound annual return.

Every return in the table includes reinvested dividends and interest, and none of them subtract fees or taxes. A low-cost index fund gets you close to these numbers, but every 0.5% in annual fees comes straight off the return.

How Much Did Each Asset Class Return After Inflation?

Stocks kept 8.5% a year after inflation over 40 years. Cash kept 0.4%.

After inflation, U.S. large-cap stocks returned 8.5% a year from 1986 through 2025, REITs returned 6.5%, small-cap stocks 6.3% and international stocks 5.1%. Gold kept 3.8% a year, bonds 2.7%, home prices 1.6% and Treasury bills just 0.4%.

Inflation, measured by the Bureau of Labor Statistics consumer price index, rose 2.7% in 2025 and averaged 2.8% a year over the full 40 years. That means $10,000 at the end of 1985 needed about $29,700 in 2025 to buy the same things. Treasury bills turned $10,000 into $34,845 over that stretch, barely ahead of inflation’s drag on cash.

Which Asset Class Has The Highest Return?

Stocks win over 30 years and longer. Shorter periods reward whatever ran hot.

U.S. large-cap stocks have the highest return over 30 years, 40 years and since 1928, which is why they anchor most beginner investing plans. The winner changes with the time frame: Bitcoin led over the last 5 and 10 years, gold led in 2025 and over 20 years, and emerging market stocks topped all traditional assets in 2025 with a 34.4% gain.

Source: S&P, NYU Stern (Damodaran), Slickcharts. The College Investor.

The pattern is the main lesson. Short periods reward whatever ran hot, and long periods reward the assets that own growing businesses. That is why most long-term investors start with broad, low-cost index funds and ETFs and add other asset classes around them.

What Has The Stock Market Returned Over Nearly 100 Years?

10.0% a year since 1928, or 6.8% after inflation.

The S&P 500 returned 10.0% a year from 1928 through 2025, or 6.8% a year after inflation, based on NYU Stern professor Aswath Damodaran’s historical returns data. At that rate, $10,000 invested at the start of 1928 grew to about $116 million by the end of 2025, or about $6.2 million in today’s dollars, the same long-run figure behind our beginner’s plan for starting to invest.

Compound annual returns, 1928 to 2025. Bars compare annual return. Source: NYU Stern (Damodaran), BLS. The College Investor.

Treasury bonds, home prices and T-bills all trailed far behind. After inflation, Treasury bonds kept 1.4% a year, home prices 1.1% and T-bills 0.3%, which means cash in Treasury bills barely held its value for nearly a century.

The worst 10-year stretch, 1929 through 1938, lost 1.7% a year, so a decade isn’t always long enough. Two decades has been, which is why compound interest rewards money you can leave alone for 20 years or more.

How Have Stocks Performed Over The Last 40 Years?

Large caps led. Small caps, international and emerging markets trailed.

Stocks have produced the highest long-term returns of any asset class, but the type of stock you buy through your brokerage account matters. U.S. large-cap stocks returned 11.5% a year over 40 years, small-cap stocks 9.2%, international developed stocks 8.0% and emerging market stocks 6.6% a year over the last 30 years.

Stock returns come with large drops. The S&P 500 fell 37% in 2008 and 18.1% in 2022. You can buy all four funds through Vanguard or any major broker, and our Vanguard review covers its fund lineup and fees.

Is Real Estate A Better Investment Than Stocks?

REITs came close. Home prices alone did not.

Real estate investment trusts (REITs) returned 9.4% a year over 40 years, close to small-cap stocks but 2 points a year behind the S&P 500. U.S. home prices rose 4.4% a year, or 1.6% after inflation, which is much lower than most people expect from real estate investing.

The two numbers measure different things, which matters if you’re weighing a REIT fund against buying a rental. The FTSE Nareit All Equity REITs index includes the rent REITs collect and pay out as dividends. The Case-Shiller home price index tracks price changes only, so it leaves out the rent a landlord collects and the rent a homeowner saves, and it ignores leverage from a mortgage.

REITs have struggled recently, returning 4.8% a year over five years and 2.3% in 2025. Owning a rental can earn far more than 4.4% a year, but it comes with repairs, vacancies and work that a fund doesn’t. Vanguard’s Real Estate Index Fund (VGSLX) is one low-cost way in, and you can buy it at any of the best online stock brokers.

How Have Bonds And Cash Performed?

Steady, but well below stocks, and recently worse than inflation.

U.S. bonds returned 5.5% a year over 40 years and Treasury bills returned 3.2%, both well below stocks. Bonds rose 7.3% in 2025 according to Bloomberg’s U.S. Aggregate index, but they’re still recovering from a 13% loss in 2022.

Bonds earn their place by holding up when stocks fall. In 2008, the S&P 500 lost 37% while U.S. bonds gained 5.2%. That cushion failed in 2022, when rising rates pushed stocks and bonds down together, and 10-year Treasury bonds lost 17.8%. Our look at bond funds vs. individual bonds covers how to hold them.

Cash is the safest asset in the table and the most likely to lose to inflation. T-bills averaged 4.2% in 2025, but they returned less than inflation over the last 5, 10, 20 and 30 years. Keep your emergency fund in cash and invest the money you won’t need for years.

How Has Gold Performed Compared To Stocks?

Gold beat stocks over 20 years, but not over 30 or 40.

Gold returned 6.7% a year over 40 years, well behind stocks, but it beat the S&P 500 over the last 20 years with an 11.3% annual return. Gold rose 66.2% in 2025, its best year since 1979 in NYU Stern’s data, which helped push it past stocks in our top performers table.

Gold’s long-term record is uneven. It lost 21.4% in 1997 and 27.6% in 2013, and from 1985 through 2004 it gained 41% in total while consumer prices rose 81%. Gold pays no dividends or interest, so its entire return comes from price changes. Most investors who hold gold keep it to a small slice of a diversified portfolio as a hedge rather than a core holding.

How Does Bitcoin Compare To Other Asset Classes?

The highest 10-year return in the table, with the deepest losses.

Bitcoin returned about 70% a year over the 10 years through 2025 and 24.7% a year over five years, far more than any other asset in the table. Many investing apps now sell it next to stocks, but it has no 20, 30 or 40-year figure because trading began around 2010.

Those returns came with losses no other asset class matched. Bitcoin lost 73.6% in 2018 and 64.3% in 2022, according to Slickcharts’ Bitcoin return history, and it lost 57.5% in 2014 based on year-end closing prices. It also lost 6.3% in 2025, the same year gold gained 66%, a reminder of why most investors keep crypto to a small slice of their asset allocation.

How Does Wage Growth Compare To Investment Returns?

3.7% a year, or 0.9% after inflation.

Average U.S. wages grew 3.7% a year from 1985 through 2024, based on the Social Security Administration’s national average wage index. After inflation, that’s 0.9% a year, less than every investment in the table except cash, which is why building wealth takes investing, not just raises.

Your earning power is the biggest asset you have early in your career, but raises alone won’t build wealth. A $10,000 salary in 1984 would have grown to about $43,300 by 2024 at the national wage growth rate. The same $10,000 invested in the S&P 500 over a comparable 40 years grew to nearly $770,000. Investing part of every raise, starting with your 401(k), is how you capture that gap.

How Should You Use These Returns To Invest?

Set expectations, match your mix to your timeline and keep costs low.

Use long-term returns to set expectations for your retirement accounts, not to chase last year’s winner. Stocks have earned the most over 30 years and longer, but every asset class in the table has had multiyear stretches of losses or flat returns.

Where To Invest In These Asset Classes

How We Calculated These Returns

Index-level total returns from the original providers, through December 31, 2025.

Every figure is a compound annual growth rate for the calendar years shown, using annual total returns with income reinvested. Earlier versions of this page used The Measure of a Plan dataset, which stops at 2024, so we rebuilt every number from the index providers and cross-checked each series against a second source.

Past returns don’t predict future returns. These numbers show what happened, not what will.