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Imagine you have $100,000 in 2013 and you need to decide what to invest in. Here are a few options:
\- A 1-bedroom condo in a Boston suburb, which was priced around $110,000 is now close
to $350,000 in value, resulting in a 3.18x return (or approximately $318,000 after normalization).
\- Gold, which was priced around $1,200 per ounce, increased to $4,000 per ounce, resulting in a 3.33x return (or approximately $333,000).
\- VOO, which was around $140, increased to $636, resulting in a 4.54x return (or approximately $454,000, based solely on price appreciation).
Based on this 2013-2026 investment window, stocks appear to be the better option compared to gold and real estate. However, with gold currently priced at around $4,000 per ounce, it raises questions about the notion that stocks are always the safest long-term investment.
My perspective is that the belief in the safety of investing in gold and land is often driven by a desire for stress relief and control, rather than solely by the potential for returns. Stocks can be emotionally challenging due to market fluctuations and news headlines, but they offer a relatively straightforward investment strategy with the ability to set and forget through index funds. Real estate, while potentially more stable on a day-to-day basis, can be illiquid and requires ongoing maintenance and management, such as HOA fees, repairs, and property taxes. Gold, on the other hand, is relatively easy to hold, but it lacks the potential for compounding returns and can experience significant price volatility over extended periods.
I wonder if there are other factors that I may be overlooking, such as the impact of dividends, the potential for real estate leverage and rental income, or the influence of taxes on investment returns.
I am not even thinking about NASDAQ stocks QQQ, which had much higher returns nor crypto. I’m just thinking like a long-term safe investor and not like a super nerdy stock market guy, which are very few who know when to get in and when get out.
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