The Best Asset Class Performers From 2001 – 2020

Before I share the best asset class performers from 2001 – 2020, I want you to guess the following four things:

1) Of the following asset classes, the S&P 500, a 60/40 stock/bond portfolio, Bonds, REITs, Commodity, Emerging Market Equity, Small Cap, Homes, which performed best?

2) What was the annualized return for the best-performing asset class within 0.5%?

3) What was the annualized return for the worst-performing asset class within 0.5%?

4) What was the annualized return for the average investor within 0.25%?

If you guessed two or more correctly, you are very much in tune with the market. Therefore, in terms of how to invest, you may want to increase the actively managed percentage of your overall investments.

If you only got one out of four right, then you're probably inline with the average investor. And if you got zero right, then you should probably be a 100% passive index investor or let a robo-advisor manage your money for you. All you have to do is electronically send in a check each month and the robo-advisor will asset allocate for you.

Now that we've gone through this exercise, let's compare the actual results to your estimates. When it comes to honing your forecasting abilities, reviewing data and analyzing why you were wrong is very important.

If we can consistently make decisions with a 70% positive probability, we will do very well in life. Waiting until we have 100% certainty is often impossible and unnecessary.

The Best Asset Class Performers From 2001 – 2020

Below are the best asset class performers compiled by J.P. Morgan, one of the largest traditional asset managers in the world.

The firm charges clients 1.15% – 1.45% of assets under management. Once you get above $10 million, the AUM fee usually drops below 1%. Can you imagine paying $100,000+ a year in fees on your $10 million portfolio? Ouch.

Digital wealth advisors were created during the last financial crisis to help lower fees. Further, a lot of people started getting tired of active funds underperforming passive index funds.

Annualized returns by asset class 2001 - 2020 - best asset class performers

As you can see from the results, REITs is the #1 performer with a 10% annualized return, followed by Emerging Markets Equity at 9.9%, Small Cap at 8.7%, and High Yield at 8.2%.

The S&P 500 returned a respectable 7.5% a year between 2001 – 2020. I think most of you would have guessed a higher return given the markets have done so well. However, don't forget that between 2000 to 2012, the S&P 500 essentially went nowhere.

On a relative basis, Bonds at 4.8%, look pretty good given bonds are lower risk and less volatile. Today, Treasury bonds are yielding over 5%, which is mighty attractive in my opinion.

Homes at 3.7% is relatively impressive compared to inflation at 2.1%. One of the arguments naysayers of homes as an investment have argued is that homes generally only increase at the rate of inflation. But this wasn't true for the 20-year period between 2001 – 2020. Further, once you add on leverage through a mortgage, the cash-on-cash returns for homes easily moves to the teens.

Commodity is disappointing at -0.5%. You would think commodities would do OK given most are finite resources that tend to hold their value during times of uncertainty. Commodities include metals, energy, agriculture, livestock and meat.

The best asset class performers typed out:

  • REITs: 10.0%
  • EM Equity: 9.9%
  • Small Cap: 8.7%
  • High Yield: 8.2%
  • S&P 500: 7.5%
  • 60/40: 6.4%
  • 40/60: 5.9%
  • DM Equity: 5.0%
  • Bonds: 4.8%
  • Homes: 3.7%
  • Average Investor: 2.9%
  • Inflation: 2.1%
  • Cash: 1.4%
  • Commodity: -0.5%

If you want to beat inflation, then it's best to buy REITs, private real estate, S&P 500, and bonds for the long run. The key is to invest in risk assets that tend to provide returns greater than headline inflation. With headline inflation elevated, investing is very tricky in 2023 and beyond.

Hard To Be An Average Investor

Meanwhile, the average investor returning 2.9% a year is clearly not impressive. I'm not sure how J.P. Morgan calculates the average investor performance. However, we know that the average person tends to make too many emotional investing decisions.

The inability to consistently outperform the market is the reason why the vast majority of us should stick to a proper asset allocation model by age. Investors should also try to understand their true risk tolerance. The vast majority (80%+) of our public investments should be in passive index funds or ETFs.

Our core tax-advantaged retirement portfolio(s) should be mostly left alone. I'm talking about our 401(k), IRA, Roth IRA, SEP-IRA, 403(b), and so forth.

For our taxable investments, it's worth adjusting our strategies based on a purpose e.g. getting more conservative if buying a house within the next 12 months, retiring within the next five years, etc. If we can pick the future best asset class performers, great. But chances are, we will not or won't have as much exposure as we like.

REITs: The Best Performing Asset class

REITs outperforming Homes by 6.3% a year for 20 years is impressive. This outperformance may indicate that professional real estate managers can add tremendous value. A savvy manager can acquire at a good price, improve occupancy rates, remodel to attract more visitors, and negotiate a better sale. Further, REITs use leverage.

The real estate market is less efficient than publicly-traded asset classes. Therefore, experienced individuals who know how to bargain, remodel, expand, and predict demographic changes often prefer real estate as well.

The combination of rising asset values and consistent dividends in a low-interest rate environment make REITs and Homes very attractive. Personally, I continue to believe REITs/private eREITs and Homes will be two of the best-performing asset classes over the next decade.

I like the CrowdStreet real estate investing platform, which offers mostly individual deals in 18-hour cities. 18-hour cities tend to have lower valuations, higher yields, and higher growth. With the demographic shift towards lower-cost areas of the country, 18-hour cities is where I've invested $810,000 of my capital.

Just make sure to do your due diligence on each sponsor before making an investment. Diversification, experience, and a strong track record are key.

An Asset Shift From Bonds To Real Estate Is Possible

Since bond yields are so low, I expect more investors to replace their bond holdings with real estate as well. Given the bond market is even larger than the equity market, even a small asset shift towards real estate from bonds can make a significant difference.

During bad times, real estate has similar defensive properties to bonds. Investors want to own real assets, especially if mortgage rates are declining, making real estate more affordable. During good times, real estate can also significantly participate on the upside with rising prices and rents. We've seen this defensive/offense ability play out perfectly for real estate since the pandemic began.

As a result, I will continue to keep roughly a 40% allocation of my net worth in physical real estate, REITs, real estate ETFs, and real estate crowdfunding. My goal is to eventually get my “online real estate” value equal to roughly 25% of my overall real estate value. I've reached my limit for how many physical properties I'm willing to manage.

Remembering The Year 2001

2001 was a critical time for me. I was finishing up my two years at Goldman Sachs in NYC and wasn't going to be asked to stay for a coveted third-year. The dotcom bubble had started to burst in March 2000 and things weren't looking good.

Luckily, my VP, who sat next to me, passed over the phone when a recruiter called her to move firms. One thing led to another and I joined Credit Suisse in San Francisco a couple of months later.

When I wrote about luck being a significant reason for our good fortune, this was one of those lucky breaks. If I hadn't been passed the phone, I don't know what I would have done. It was too late to apply to business schools in April for that year. Further, not many investment banks were hiring back then.

I had dodged a bullet because over 90% of my analyst class was laid off or moved on within two years. At the time, the dotcom crash felt very significant. From June 2000 to December 2002, the S&P 500 declined from 1,517 to 847, or 44%. But the NASDAQ collapsed from 3,860 to 1,329, or 65%!

Today, these levels look insignificant with the NASDAQ over 15,700 and the S&P 500 over 4,600. Invest for the long term, but expect tremendous volatility. Continuing to earn and invest over the long-run is also important.

Sitting here 20 years later, I am pleasantly surprised with how well things have worked out.

Lower Expected Returns Going Forward

2021 was another amazing year for investors, with the S&P 500 up another 27%. However, it's probably wise to expect lower returns in stocks, bonds, real estate, and other asset classes going forward. The best asset class performers of the past certainly might not be the best performers of the future.

Money management giant, Vanguard, has already come out with its 10-year return assumptions for U.S. stocks, U.S. bonds, and Inflation. Their assumptions seem too low across the board. However, the returns could certainly come true.

For those who plan to retire early, you should consider lowering your withdrawal rate assumptions. Risk assets could easily correct by 10%+ and stay depressed given high valuations and rising interest rates.

Vanguard 10-year return forecast for stocks and bonds

Instead of U.S. stocks suddenly starting to compound at only 4.02% a year for 10 years, the more likely scenario is we experience another bear market within this time period. In other words, U.S. stocks might return 10% a year for five years, take a 30% haircut in year six, then return 6.3% a year for the remaining four years.

Looking at Vanguard's 10-year return assumptions for U.S. stocks and U.S. bonds makes real estate and other asset classes more attractive. For example, earning above a 4.02% cap rate for real estate isn't too difficult in most parts of the country. And if a 5% cap rate property compresses to a 4% cap rate, that's a healthy 25% appreciation.

The housing market will most definitely slow from its torrid pace. However, if Vanguard's return assumptions are correct, then real estate should get comparatively more attractive. Some investment firms, like Goldman Sachs, are forecasting another 16% increase in housing prices in 2022.

And if the U.S. housing market ever turns into the Canadian housing market, I would expect another 35% upside, at least. United States real estate is the cheapest developed-country real estate in the world.

Investing Our Money For The Next 20 Years

20 years feels like a damn long time to invest. However, if I change the purpose of my investing from myself to my children, it doesn't seem as long. Further, it makes investing feel more meaningful.

Frankly, I am trying to spend more of my investment returns on a better life now. The gains since the pandemic began have been a surprise. Therefore, it would be nice to convert some of those surprise winnings into more tangible things and great experiences.

To get more motivated to invest, the simple solution I've come up with is to divide and conquer. My wife and I will continue to invest in our children's 529 plans, custodial investment accounts, and custodial Roth IRAs for the next 20 years. These accounts will be ring-fenced exclusively for our children.

Hopefully, in 20 years, when our son is 24 and our daughter is 22, they will appreciate that we invested for them when they could not. And if they don’t appreciate our efforts, we’ll just keep the money! Concurrently, my wife and I will continue to invest to retain our financial independence.

20 years will come whether we like it our not. Some of us sadly won't make it during this time period. Therefore, we must always try to balance investing for the future and making the most out of each day.

Diversify Your Investments Into Real Estate

Stocks are very volatile compared to real estate. Therefore, if you want to dampen volatility and build wealth at the same time, invest in real estate. The combination of rising rents and rising capital values is a very powerful wealth-builder.

In 2016, I started diversifying into heartland real estate to take advantage of lower valuations and higher cap rates. I did so by investing $810,000 with real estate crowdfunding platforms. With interest rates down, the value of cash flow is up. Further, the pandemic has made working from home more common.

Best Private Real Estate Investing Platforms

Fundrise: A way for all investors to diversify into real estate through private funds with just $10. Fundrise has been around since 2012 and manages over $3.3 billion for 400,000+ investors. 

The real estate platform invests primarily in residential and industrial properties in the Sunbelt, where valuations are cheaper and yields are higher. The spreading out of America is a long-term demographic trend. For most people, investing in a diversified fund is the way to go. 

CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations and higher rental yields. These cities also have higher growth potential due to job growth and demographic trends. 

If you are a real estate enthusiast with more time, you can build your own diversified real estate portfolio with CrowdStreet. However, before investing in each deal, make sure to do extensive due diligence on each sponsor. Understanding each sponsor's track record and experience is vital.


I've invested $954,000 in real estate crowdfunding so far. My goal is to diversify my expensive SF real estate holdings and earn more 100% passive income. I plan to continue dollar-cost investing into private real estate for the next decade.

Venture Capital Investing To Capitalize On Growth Companies

Investing in private companies is where you might be able to find the next Google, Meta, Figma, Apple and more. Personally, I allocate about 10% of my capital to venture capital.

The most interesting fund I'm allocating new capital toward is the Innovation Fund. The Innovation fund invests in:

  • Artificial Intelligence & Machine Learning
  • Modern Data Infrastructure
  • Development Operations (DevOps)
  • Financial Technology (FinTech)
  • Real Estate & Property Technology (PropTech)

Roughly 35% of the Innovation Fund is invested in artificial intelligence, which I'm extremely bullish about. I don't want my kids asking me in 20 years why I didn't invest in AI or work in AI today. 

The fund's investment minimum is also only $10, as Fundrise has democratized access to venture capital as well. Most venture capital funds have a $200,000+ minimum. 

The Best Asset Class Performers is a Financial samurai original post. I've been helping people achieve financial independence sooner, since 2009.

52 thoughts on “The Best Asset Class Performers From 2001 – 2020”

  1. Great breakdown Sam. I’ve done fantastic with both my house and with my stocks and mutual funds over the last 20 years. However, I agree with Vanguard that we can probably expect a lot less return in the future, including some big corrections. I definitely want to add some Fundrise to my portfolio.

  2. Thanks Sam. Given that we’re entering into a period of perhaps prolonged higher inflation, what we’re the highest RÓI asset classes from 1971-1981?

    Would love to see an article on that.

  3. I just came into an extra 50k recently. Would you invest right now and where? Just looking for some others advice. Was thinking reits and some index etfs.

  4. You probably also need to start including Crypto when you do this. It is starting to take on mainstream adoption and definitely not going away at this point.

      1. any description of crypto returns would benefit greatly from determining, if plausible, the average investor return.

        I’m not a fan regardless, since there is no barrier to entry for 1000s of new coins each year, and because of the energy waste and its similarity to penny stocks where a small coordinated action that pump and dump. It’s clear that the vast majority of the realized gains go to a tiny number of traders, and also that > 90% of digital wallets have a piddling sum.

  5. Thanks for a great article Sam. Very insightful. For several yrs we were very much against RE having suffered loss 50% and being majorly underwater in 2012. But, really wanted to FIRE and the numbers just kept going back to RE. Took 50% of our NW and repositioned to RE 20 mos ago, got LUCKY and came out with 46% cash on cash return (which is a low ballpark figure since we didn’t finish purchasing till mid-2021). The net cashflow covers all expenses and we were able to quit our jobs 8yrs sooner than if we had just kept investing in stocks/bonds. We purchased all out of state, already rehabbed Hm’s. Good property managers make a huge difference. When purchasing it’s a lot of work, but after you close it takes about 1-5hrs a month to review the statements and deal with any issues. Lots of people tell us, “oh that’s too stressful and too much work.” Actually, it’s not as stressful or much work compared to a FT job.

    1. Nice job overcoming your previous experience, learning from it, and taking action!

      Good point on the last bit indeed. I need to remind myself that one over there is some kind of stressful tenant situation.

    2. Sam, im in california and have considered out of state. How did you go about it and what state did you buy in?

  6. Sam….this is prophetic….”If we can consistently make decisions with a 70% positive probability, we will do very well in life. Waiting until we have 100% certainty is often impossible and unnecessary.” This can be applied to any part of our lives, not only financial. Kudos to you!

  7. one minor detail on the comment: “Hopefully, in 20 years, when our son is 24 and our daughter is 22, they will appreciate that we invested for them when they could not. And if they don’t appreciate our efforts, we’ll just keep the money!”

    in California, Minors attain majority at age 18 (other states vary from 18-21). 529’s excepted, UTMA’s and Custodial Roth IRA’s become the child’s (now an adult) at majority….in other words, you can no longer ‘keep the money’. Trusts can be an option but require some work to set up. So you may not be able to ‘just keep the money’ when they are 22 or 24 :) Have responsible kids.
    Love the newsletter, cheers.

  8. Alex from FL


    What public REITs do you like? SunBelt multifamily & storage REITs seem like obvious winners. Do you invest in or follow any specific REITs that you like?


  9. Hi Sam,

    In your post you acknowledge the value of leverage owning homes, yet later mention that you’re at your physical RE limit. I assume due to its time commitment? Why not utilize a good property manager, especially in the low rate environment we continue to be in?
    Do you feel that eREITs will outperform leveraged single family rental homes over the next decade?

    Thanks for your insights,

    1. Hi Rob, it’s bc I don’t want to manage a manager and lose profits. I’ve been managing rental properties for 16 years, so I know what to do. And I can do it up to a point. But managing 3 properties is my limit. I have another that is with a vacation property rental. Feels great not to have to deal with things.

      The older I get, the more I optimize for time. Making max profits doesn’t interest me anymore.


  10. I said housing, simply because with 20% down, 3.9% is multiplied by 5, or nearly 20% annualized on original investment. REITs are actually inefficient compared to what you can do on your own.

    I’m guessing if you went back another 5 or 10 years that the S&P 500 would have done as well as REITs, or better. I’m definitely more bullish on housing/REITs the next 5 years than the overall market but anything is better than cash and most bonds at the moment.

  11. Ah I guessed right on REITs. I didn’t realize that commodities did that bad though, ouch. Fascinating data and insights on the performance and to reflect on where we’ve been and what we’ve gone through.

  12. I guess crypto doesn’t count as an asset class despite a cumulative market cap of $3 Trillion dollars? Granted it’s only been 13 years since the inception of bitcoin, which has a 190% CAGR…

    The asset classes that have performed the best in the past decade is likely not the same ones for the next decade at secular inflection points. DYDD and GLTA

    1. Crypto is definitely an asset class in my opinion. The problem is that if he included it in his analysis it would make the returns of every other asset class look terrible and it would become an article about crypto.

  13. Comparing REITs to homes straight up is ridiculous. REITs plainly use leverage, as do people who buy homes as investments. If they don’t use leverage, then the rents far exceed the expenses, meaning the total ROI has to include both asset appreciation and cashflow.

    If one realistically averages 67% LTV (meaning re-leverage up to 75% periodically), one only needs all expenses (including finance charges) to be paid out of rent (cashflow breakeven) to realize a return of 3x the appreciation rate, which this data suggests is 11.1%. Being cashflow positive makes it even better, and we haven’t even gotten to the tax advantages yet!

    The disadvantage of direct-owned real-estate is that it is much less passive than the other options listed, but if one manages properly, the ROI is plainly superior, as it should be for a “semi-passive” investment.

    The person who earlier suggested that homes appreciate negatively once all expenses are factored in neglected to account for revenue entirely. Even if it’s your own residence, an owned house has a huge opportunity cost savings in the form of rent not paid.

    1. How does that work? You still have to pay borrowing costs on the mortgage which are at least 3% of 80% of the home price (that’s another net loss of 2.4% per year which i didn’t factor in). There’s also a large liquidity risk, where you lock yourself into a specific location but may need to move for a job, high crime rates, or can no longer afford the expenses, then you must sell an illiquid asset quickly.

      1. Sorry to butt in Dan but if I can make a suggestion, watch the tv show Yellowstone. It shows you how a lot of us feel about owning our own house and land no matter what the opportunity cost is. Sometimes the best investments don’t make you the most money.

        1. Watching it today, great suggestion btw thank you. Reminds me of a western version of the hit HBO series Succession, also about fighting for power and influence.

      2. I’ll give you an example where I am that I bought 6 months ago.

        $300k purchase price
        20% down is $60k. Add in $5k for closing costs.
        Property tax of $2500 annually. HOA cost of $600 annually. Insurance $1k annually.

        $1.9k/month Rent
        $1k/month mortgage @ 3% mortgage
        $350/month tax/HOA/Insurance
        $100/month maintenance budget
        =$450/month cash flow * 12 = $5,400 cash in yr 1
        +$5,000 principal paydown
        +$18k at 3% appreciation
        = 43.5% total return in year 1

        And Zillow makes it stupidly easy to find AND screen people. Not all of mine have been this good but all of them have been at least a 30% total annual return on investment with 3% appreciation assumption.

        1. Don’t think Dan will accept and understand.

          It doesn’t matter how much so many people have made in real estate, from the viewpoint of the Dans in the world, it is still a loss.

          It is amazing how myopic people are. Why is it so hard to see the other side sometimes?


  14. The other Bill

    The returns listed above assume that you bought on a specific date, never added, never reinvested, or never sold during the timeframe. There interesting but that’s about it. Vanguard only lets me go back ten years for my performance. I dollar cost average weekly, reinvest all my dividends and have never sold in a S@P 500 fund. My ten year rate of return is 15.4%. The annualized return if I just bought on that date ten years ago is 14.3%. If I just bought on that date and reinvested my dividends my rate would be 16.5%. The biggest difference is that I bought weekly the entire ten years and earned my 15.4% on all money I added during that timeframe.

    I’m not arguing that JP Morgan’s results are wrong. I’m saying they don’t take into account any variables and the variables have more influence on the results than anything else. Its just way more complicated than picking a date and saying this is better than that.

    1. They assume you invested once but did reinvest dividends and didn’t pay any taxes. Under these assumptions, for the 20 years to December 2020 the S&P 500 returned 7.5%. For the 10 previous years it returned 13.9% p.a. This is because the return for the 10 years to December 2010 was only 1.4%. I made 5.5% pre-tax for the 20 year period in the graph by the way. So, I guess I am better than the average! The median hedge fund did exactly the same 5.5%.

  15. Sam, to answer your question, I do think REITs offer good value for the future. I also think Technology is a good long-term play. If this next decade is going to be a challenge for corporate growth, then they will be looking to reduce costs and deploy more technology to drive productivity gains. It just makes sense to me that information technology, clean energy, cybersecurity, cloud software, EV, etc. will all be good plays for the coming time.

    In 2001, our investible assets were around $2M and 20 years later we just crossed $10M. Nothing outrageous, just a good focus on savings from 2 good incomes and a buy and hold mentality with mostly passive index funds and some actively managed funds sprinkled in. This aligns pretty closely with the average returns you posted in this article over the same time period. The other part of our savings went toward accelerated payments on our mortgage and now we have home equity close to $2M.

  16. If you read the fine print for “homes” JP Morgan simply used the “median sale price of existing single-family homes” and computed the return based on the increase of the sale price. This ignores many real economic costs of home ownership which include: Property tax (at least 1% per year in most parts of the country), repairs and maintenance (factor in another 1% of the property value per year), and home owners insurance (0.35% per year), the opportunity cost of the 20% down payment, as we no longer can achieve an average return of 7.5% YoY from the S&P 500, is another 1.5% of home value. Add these losses together, and we get 3.85% per year, the average YoY equity gain was 3.7% so we are looking at a net loss of 0.15%. This is a horrible investment, worse than bonds and cash, but not as bad as commodities.

    1. Dan, I admire your persistence on justifying your decision to rent since 2019. Just make sure you save and invest the difference. Being out of the real estate market since 2019 is one thing. But to also keep most of your cash also not invested in the stock market and risk assets since the pandemic began was a suboptimal decision.

      Try to find a way to make money beyond your day job. It’s super important bc eventually, you won’t want to do your job any more.

      Related: Rising Rents, Rising Fortunes For Landlords: But Is It Fair?

      1. My opportunity cost of cashing out of the stock market in 2019 was not as severe as yours dropping out of the labor force in 2012! Salaries and wages have gone up 30% since you decided to quit, and you’re paying for all those health insurance premiums out of pocket. Hope you can get it together for 2022.

        1. You got me there Dan. The lack of income and work benefits is one of the reasons why I spend time trying to optimize my investments.

          I may not make as much or have as much as you, but that’s OK, because I’m trying to optimize for time.

          And if you have any specific tips on how I can better get it together in 2022, I’m all ears. Just saying that homes are a bad investment isn’t very helpful.


          Here’s a post you might enjoy: Three White Tenants, One Asian Landlord: A Story About Opportunity

        2. Folks, here is Exhibit A o why you don’t want to miss out on a bull market. So much bitterness and denial from those who have invested.

          Dan, if it makes you feel better, the rent you pay helps the landlord pay important expenses and live more free.

      2. He also left out the use of leverage, tax benefits, and the fact that you have to pay to live somewhere.

        1. But Dan didn’t factor in the cost of borrowing money on the remaining 80% of the home purchase price (e.g. cost of leverage). There may be no tax benefits depending on your state income taxes due to SALT, especially neaer the coastal areas. I think the cost of borrowing the money (3% per year) would cancel out the cost of “paying to live” somewhere; don’t you agree?

          1. Paper Tiger

            A lot depends on when you purchased and where you purchased. In our case, having purchased nearly 20 years ago in what has turned out to be one of the hottest markets in the country gave us many years of good tax treatment and appreciation. I would agree that if you purchased more recently, in a lower growth market, the incentives may not be quite as good.

          2. I’m looking for the removal of the SALT cap deductions in 2022! Or the big lifting to potentially $75K. That would be huge.

            You could calculate the cost of a mortgage cancels out the cost to read. Therefore, any upside would be the profit. But it all depends. With mortgage rates coming way down, it is become more affordable to buy in many places.

    2. I just sold a home I bought in 2014 for a $900,000 profit after taxes and fees. Bought for $1.2, and out $200K in it. Enjoyed living in it as well for 7 years. So not only did I make a profit, I live for free.

      Just closed on a nicer home. You can deny the benefits of real estate all you want. But plenty of people have done well and will continue to do well.

      If it wasn’t for purchasing in 2014, I’d still be renting a really mediocre place.

  17. I recently looked at my portoflio’s performance as compared to the S&P 500 over a 1,3, 5 and 10 year mark. As you probably guessed I didn’t so better than the index. I thought I did well over the years, but didn’t beat the market. I used to own a lot of individual stocks, but now I’m just down to some index funds to keep things simple. Earlier in the year I sold all my bonds and I’m soley in equities.

    I feel like I’ve spent so much time researching, following the market, to just not come close to beating it, which even the pros can’t do over time. Anytime I played individual stocks it was either boom or bust. Or I ended up owning for a very long time and later realizing because I had gains the stock hasn’t performed well compared to the rest of the market.

    I think my point is sometimes it may be better to take all the time and energy to make more money and stick your funds in an index fund and stop stressing out things. I still enjoy reading and following the market, but I think I may do less of that going forward and focus on other things.

    1. Yes, when you buy single stock investments, you’ve not only got to figure out when to buy, but when to sell. When you invest in a passive index fund or ETF, you are diversified and just ride the economic times. You can set it and forget it.

      I’ve round tripped plenty of individual investments before. If one must actively invest, allocate a portion of that money to an active fund manager with a good track record you trust.

      Related: Recommended Split Between Active And Passive Investing

  18. I got the REITS correct but had a 12% Annualized. I had Small CAP second at 8%.

    Really surprised that EM was second. My EM is not doing that. :(

    I have over 25% of my liquid assets in Private REITS. They have been very consistent winners.

    1. Good job with the guessing! EM has been tough… totally underperformed the U.S. So I guess it depends on which Emerging Markets we are talking about. Some Asian countries have done very well though.

  19. I was wondering how the breakdown of returns would be for different tax brackets. S&P ETF would be significantly different that REITs. I think this would “level” the playing field. Of course everyone is in a different tax bracket but a few examples might help.

  20. Manuel Campbell

    Hi Sam,

    Sharing some of my views :

    1) I was surprised the S&P 500 was not first. But after thinking about it, it totally make sense. This is due to the timeframe you used here. 2000 was the top of the tech bubble. So, obviously the US stock market started this period with a big drag to start the period. Without that drag, I think the S&P500 would still be first.

    2) Like you said, commodities were disappointing at -0.5%. But I think we will see a total reversal of this trend in coming years, with commodities outperforming any other asset, due to high inflation. This is because commodities are the only assets that can’t be reproduced. Bonds and shares can be issued by companies and governments. Cash can be printed by the Federal Reserve and other Central Banks. But commodities is the only asset that can’t be created by lawyers, bankers and politicians.

    I have changed my portofolio recently to increase my exposition to oil (15.8%) and have added positions in gold and silver mining companies (6.3%). I have also started very small positions in uranium (0.3%), lithium (0.2%) and lumber (0.1%). My total allocation to that sector is now 22.7%.

    3) REIT have outperformed homes for two reasons :
    a) they produce rent income whereas homes does not;
    b) they are already leveraged inside the “REIT structure” whereas homes performance is probably calculated before any leverage taken into consideration
    So, I don’t think REIT are better managed that real estate directly owned by landlords. In fact, I think it’s quite the opposite. My experience owning REITs is pretty bad, going from blatant mismanagement to constant undervaluation by the market.

    4) We can expect lower returns in the future – I’m not sure about that. Government stimulus combined with zero interest rates policies in the US, Canada, Europe and Japan make me think we could have surprinsingly high return in stocks and real estate for the next 10 years.
    For bond however, this is not only an “expectation”, but a “certainty” of “low returns”. Bonds are a “guarantee” to have mediocre returns for the coming 10 years.

    Outside of commodities, the rest of my investments are in an “S&P500-like” portfolio built myself. It is leveraged, meaning I am “short” bonds, around -20%.
    This is extremely volatile. But very performant.

    5) In 2001 was my first experience investing in the stock market. I invested all my savings in a “red-hot” airplane maker company. Then September 11 happened… Lost -50% of my money after that. The stock miraculously rised by +50% after a few months (for a net loss of -25%). I immediately sold it and bought the most boring utility company you can imagine. Still have it today. My initial stock is now down -95% since I had bought it, and it would already have been bankrupt if it had not been saved by the government…

    In 2001, I was also beginning University. I thought the tech bubble crash would have been bad for my career, but it was the opposite. Since I was in Audit & Accounting, many laws were adopted in the years following, like Sarbanes-Oxley, which forced companies to hire a lot more people to comply with all the new rules.

  21. There is big difference btw Canada and USA.
    Canada allows lot more immigrants than USA. Things would have to change a lot for USA real estate market to have 35% upside.

  22. I love your posts and I know that this is true for some people but if this is happening to anyone on this thread you are being *ROBBED*. I am at Morgan Stanley and have over 10m AUM and my fees are .35. We aren’t crushing the S&P but I’d take 20% performance with downside protection. A lot of the assets are not even charged fees because they are not being traded so they took them out of the fee based accounts. Once you get over 10m the bankers treat you like gold. I was paying .65 and then it got halved after 10m.

    1. I am also with MS and pay .65. Not $10m AUM yet.

      Having access to investments that otherwise would not be available is well worth the fee.

      I believe the MS fees start around 1% for $1m AUM and go down from there.

      I would agree that if you are not an accredited investor, then the fee is not worth it. Just put your money in ETF’s and let it ride.

    1. Paper Tiger

      Not to steal any of Sam’s thunder, but Physician on FIRE just did a great article on this, “My many real estate investments” and his personal real estate platforms he has invested in. I just read it this morning and found it very interesting.

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