Owning an index fund that invests in the Standard & Poor’s 500 was a good bet during the bull market’s nine-year run.
It was better than investing in gold, bonds and real estate.
The 325% return for the large-company U.S. stock index from March 9, 2009, to the recent market peak in January was the second-biggest bull market gain ever. That fat gain is a key statistic that proponents of owning stocks for the long run will likely use to promote the wealth-building power of stocks over time.
Indeed, a buy-and-hold investor that had $100,000 in a fund that tracks the performance of the broad U.S. stock gauge now has an account balance of roughly $425,000. That’s quite a windfall, especially versus the average 401(k) balance of $96,495 of Vanguard plan participants at the end of 2016.
How did other investments fare compare to the index that tracks America’s 500 biggest stocks?
Gold, which appreciates most when the financial world turns turbulent and inflation is on the rise, has fared poorly compared with stocks. It has risen only 43% from around $925 per ounce in March 2009, according to the World Gold Council, to Wednesday’s level of roughly $1,325 an ounce.
That means an initial $100,000 investment in March 2009 would now be worth $143,000.
Gold’s rise has been muted by a long period of low inflation following the financial crisis and a steady rise in stock prices that has kept investors’ fear levels low.
Owning a home is often cited as a good long-term investment. But the median estimated value of a U.S. home has only risen 19% from March 2009 to February 2018, according to Zillow’s Home Value Index. In the past nine years, the price of an American home increased from $175,000 to $208,000, according to Zillow, the online real estate site. Home owners would have seen their home equity of $100,000 grow to an estimated $119,000.
International diversification didn’t pay off for investors, either. An investment in the Europe Stoxx 600, a broad index of large European stocks, rose 135% during the U.S. bull market. And while that boosted a $100,000 investment to $235,000, the gain is still less than half of the broad U.S. stock market.