Real estate? Gold? Stock? What was your best bet for investment in 1990?

Investors often weigh their options carefully before making investment decisions, aiming to maximize returns while minimizing risk. Those with a long-term outlook often gravitate towards less volatile assets such as bonds or tangible assets like gold, while favoring markets they perceive as familiar, such as real estate. Stocks, with their perceived complexity and volatility, are often overlooked.

However, this cautious approach may have led many astray in 1990. Investing in the S&P 500 index at that time, except for the years following the 2008 financial crisis, would have consistently outperformed other major alternative assets. By 2023, such an investment could have yielded $2723 for every $100 invested, dwarfing the returns from real estate, which would have amounted to only $1543 per $100, assuming constant rental income.

These findings remain consistent when examining the period from as far back as 1928 to 1990. A $100 investment in the S&P 500 index during this time would have resulted in a cumulative real return of $28 895, far surpassing alternative investments. Even the second-best performing asset, Baa corporate bonds, would have yielded only a fraction of this amount, with a $100 investment returning $4722 over close to 70 years.

While the time frames analyzed may not align with the expectations of most investors, and there are certainly other investment opportunities to consider under different time frames, our research underscores the consistent positive performance of the S&P 500 index for patient investors. While the investment community often cautions that past performance does not guarantee future results, for value investors of today seeking relatively low-risk options, the S&P 500 index merits serious consideration.