Welcome to Your Pocket Matters, where we dig deep into smart money decisions that shape your future. Today, we’re tackling one of the most common — and most misunderstood — questions in personal finance: What is the best long-term investment?
Spoiler alert: If you answered “stocks,” you’re on the right track. But let’s not take things at face value. We’ll unpack the data, explore common misconceptions, and compare the actual long-term performance of five popular investment types: stocks, real estate, savings accounts/CDs, gold, and bonds.
Why Most People Get It Wrong
Every year, Gallup conducts a survey asking Americans what they think is the best long-term investment. In the latest report:
- 35% said real estate
- 21% said stocks or mutual funds
- 17% said savings accounts or CDs
- 16% said gold
- 8% said bonds
While everyone’s entitled to their opinion, this data highlights a major disconnect between perception and reality. Historical performance tells a very different story.
What History Tells Us: Returns Over the Long Haul
An influential academic paper titled “The Rate of Return on Everything, 1870-2015“ analyzed asset returns across 145 years. Let’s look at the key investment classes it focused on:
- Bills (like Treasury bills or savings accounts)
- Bonds (10-year government bonds)
- Equities (common stocks)
- Housing (residential real estate)
Here’s a snapshot of historical real (inflation-adjusted) returns in the U.S.:
| Asset Class | Annual Real Return (U.S. since 1870) |
|---|---|
| Stocks | 6.7% |
| Real Estate | 6.1% (mostly from rent) |
| Bonds | 2.5% |
| Bills | 0.9% |
Note: Real estate returns include both appreciation and rental income.
Clearly, stocks top the chart when it comes to long-term growth.
Real Estate: The Fan Favorite
Real estate consistently ranks as the #1 choice in public opinion. But is it truly the best?
The Homeownership Illusion
Most people equate real estate investing with owning a home. But personal homeownership is more of a lifestyle choice than an investment. Yes, home values rise over time — but historically, home price appreciation averages just around 0.9% per year after inflation.
What drives better real estate returns? Rental income. When you include rents, real estate looks much more attractive — pushing returns into the 6% range. Still, it falls just short of stocks.
So, unless you’re buying properties to rent out, real estate probably isn’t your best bet for long-term growth.
Stocks and Mutual Funds: The Real MVP
Only 21% of Gallup respondents picked stocks as the best long-term investment — but data screams otherwise.
The S&P 500, a benchmark for U.S. stock performance, has returned about 10% annually before inflation (closer to 7% after inflation) over the past century. That makes it the top-performing asset class over time.
Sure, stocks are volatile. The ride can be bumpy. But for patient investors who ride out the market’s ups and downs, the payoff is substantial.
Why Average ≠ Normal
Let’s say the 20-year average return is 6%. That doesn’t mean you’ll earn exactly 6% every year. One year might be +25%, the next -10%. But over time, it smooths out to a healthy average — which is what matters when you’re investing for decades.
And if picking individual stocks stresses you out, consider index funds. They let you own a slice of the entire market, reducing risk and increasing reliability.
Savings Accounts and CDs: Safe, But Stagnant
Savings accounts and CDs are often viewed as low-risk investments. That’s true — but they also offer low rewards.
The national average for savings accounts hovers around 0.07%, and even high-yield savings accounts rarely offer more than 4% APY. CDs aren’t much better.
If your interest rate barely matches inflation, your real return is effectively zero. That means your purchasing power doesn’t grow.
When Savings Make Sense
- Emergency funds
- Short-term goals (vacations, car down payments)
- Parking cash during economic uncertainty
But for long-term investing? You’re better off elsewhere.
Gold: Glitter, But Not Growth
Gold has a reputation as a “safe haven.” But its long-term performance doesn’t stack up.
What the Data Says
Between 1871 and 2012, gold returned about 1-2% annually after inflation. Between 2000 and 2012, it had a hot streak — an 11.8% real return — but since then, its performance has been flat.
Gold is great at preserving value during market turmoil, but it’s not a growth asset. If you’re investing for the long haul, gold should be a small part of your portfolio, not the centerpiece.
Bonds: Slow and Steady (But Too Slow?)
Only 8% of Americans picked bonds as the best long-term investment — and they may not be far off.
Long-term U.S. Treasury bonds have averaged 2.5% to 3% after inflation over the past 100+ years. That’s better than cash, but significantly lower than stocks.
However, bonds shine in other areas:
- They offer predictable income
- They stabilize portfolios during stock market downturns
For retirees or conservative investors, bonds are invaluable. But if you’re young and aiming to build wealth? You’ll want stocks to lead the charge.
A Look Back: Performance Since 2011
Let’s rewind to 2011. Here’s how different investments have performed since then:
| Asset Class | Approximate Return (2011-2020s) |
| Stocks (S&P 500) | +141% |
| Real Estate | +50% |
| Bonds | +30-50% |
| Savings/CDs | +10% or less |
| Gold | Flat or minor loss |
This wasn’t cherry-picking — it’s simply a reflection of where the money grew.
What About Crypto?
We get this a lot: “What about Bitcoin?”
Cryptocurrency is not a traditional investment. It’s highly speculative and extremely volatile. Some folks made fortunes — others lost their shirts. If you want to dabble, that’s fine. But don’t treat crypto like your retirement plan.
Final Thoughts: Where Should You Put Your Money?
Here’s a quick wrap-up:
- Stocks = Best long-term growth
- Real Estate = Solid (with rental income), but often misunderstood
- Gold = Hedge, not a growth tool
- Savings/CDs = Great for safety, terrible for growth
- Bonds = Lower returns, but excellent for stability
The key isn’t picking a single investment. It’s building a diversified portfolio that matches your goals, timeline, and risk tolerance.
Build Wealth the Smart Way
Want to grow your money without guesswork? Stick to proven strategies. Historically, stocks win the long game — hands down.
But don’t just take our word for it. Look at the data, understand your goals, and invest accordingly.
Thanks for reading, and remember: Your pocket really does matter.
FAQ: What is the Best Long-Term Investment? A Deep Dive Into Stocks, Real Estate, Gold, and More
To make things easier, we’ve pulled together some of the most frequently asked questions to help you navigate your long-term investment journey with confidence.
What is considered a long-term investment?
Long-term investments are assets you plan to hold for at least 5–10 years (or longer). These typically include stocks, real estate, and bonds. The idea is to let your investment grow over time, ride out short-term market swings, and benefit from compound growth.
Are stocks really safe for the long run?
Yes—if you stay invested. While stocks are volatile in the short term, history shows they’re the top performers over long periods. Diversified index funds especially tend to weather market storms and deliver solid growth over decades.
Is buying a home a good investment?
Buying a home can be a smart move for stability and lifestyle, but it’s not always the best financial investment. Home values rise slowly over time. If you want strong returns from real estate, rental properties are usually a better bet.
What’s the downside of keeping money in savings accounts or CDs?
The main issue is inflation. Even if your account earns 1–4% interest, inflation can eat away at your purchasing power. These options are great for short-term goals or emergency funds—but not for long-term wealth building.
Why do people still invest in gold?
Gold feels “safe” during uncertain times. But it doesn’t grow much in value over time. Historically, it has underperformed compared to stocks and even some bonds. It’s better as a hedge—not your main strategy.
Are bonds worth it for younger investors?
Bonds are more useful as you near retirement, when preserving wealth becomes more important than growing it. Younger investors often benefit more from stocks due to higher long-term returns, though a small percentage in bonds can add balance.
What if I’m nervous about stock market crashes?
That’s totally normal—but remember: crashes are part of the game. The market has always recovered, and those who stay invested typically come out ahead. Diversification and long-term thinking are your best friends.
Is crypto a smart long-term investment?
Cryptocurrency is highly volatile and speculative. While some have made big gains, others have lost a lot. If you invest in crypto, treat it like a high-risk side bet—not a core part of your long-term strategy.
What’s the easiest way to start investing for the long term?
Start with a low-cost index fund (like an S&P 500 ETF). It spreads your money across hundreds of companies and tends to grow reliably over time. Use a reputable brokerage, automate your contributions, and let time do the heavy lifting.
How do I decide which long-term investment is right for me?
It comes down to your goals, timeline, and risk tolerance. Younger? Go heavier on stocks. Want stable income? Add some bonds or real estate. Scared of volatility? Keep some cash. A balanced portfolio is the sweet spot.
Abhishek started Your Pocket Matters in 2025 to share his personal experiences with money—both the struggles and the successes. From facing significant losses in trading to turning things around and becoming financially independent, he’s learned valuable lessons along the way. Now, he’s here to help you take control of your finances with honest, practical advice—no scams, no gimmicks, just real strategies to build wealth and achieve financial freedom.
- Abhishek Sinhahttps://yourpocketmatters.com/author/abhisheksinha8884gmail-com
- Abhishek Sinhahttps://yourpocketmatters.com/author/abhisheksinha8884gmail-com
- Abhishek Sinhahttps://yourpocketmatters.com/author/abhisheksinha8884gmail-com
- Abhishek Sinhahttps://yourpocketmatters.com/author/abhisheksinha8884gmail-com
