Return on Investment for Various Assets
Return on investment has varied dramatically across asset classes. Cumulative total return on investment of $1.00 in stocks have outperformed those for gold by over $480K in the 206 year period from 1802 to 2008! Similarly, stocks outperformed bonds by nearly 3% points per year which equates to $479K over 206 years. Below is a table on the compounded total return on $1.00 invested in various asset classed:
Total Real Return on Investment of $1 (1802-2008)
|Asset||Real Total Return||Annual Growth Rate|
Source: Common Sense on Mutual Funds, J. Bogle 2010
Using data from Irrational Exuberance (R. Shiller), the US real home price from 1890 to 2014 appreciated from $1.00 to $1.34, an annual compound growth rate of 0.25%. While this is not over the same period of time, it is evident that homes have no real return on investment over a long period, especially when considering the available alternatives.