Which has performed better historically, the stock market or real estate?

Real Estate, Stocks
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February 2017
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Great question. The stock market, as measured by the S&P 500 Index, has had an average annual return of 10.31% from 1970 - 2016. The real estate market has had an average annual return of 11.42%. That is measured by the publicly traded REITS (the NAREIT Equity REIT Index from 1970-1977 and the DJ Wilshire REIT from 1978-2016). To put this into dollar terms, if you would have invested $10,000 in the S&P 500 in 1970, by the end of 2016, your investment would have grown to $1,005,588. If you would have invested $10,000 into the DJ Wilshire REIT index, your investment would have grown to $1,609,932. The Real Estate market is a little bit more volatile than the stock market, but not by much. The standard deviation for the S&P 500 is 17.12% which means there is a 95% chance that your return in any given year will fall between -23.93% and 44.55%. The standard deviation of the Real Estate market is 18.92% which means there is a 95% chance that your return in any given year will fall between -26.42% and 49.26%. The worst 1 year return for the stock market was in 2008, it dropped 37%. The worst 1 year return for the Real Estate market was also in 2008, it dropped 46.49%.

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