NEW YORK – Another quarter, another lesson in long-term investing.
Economic uncertainty around the world and a brutal start to the year for stocks helped send the price of gold surging to its best quarter in 30 years. But an analysis of 10 common investments by the Associated Press shows that regular investors who put a steady amount of money every month into an account like a 401(k) would have been far better off in stocks or bonds.
In just the first three months of 2016 the biggest gold exchange traded fund soared 16 percent. Gold's track record over the last decade is far from glittering, though. Last quarter's jump allowed the gold fund to cut only a bit into the long string of losses it has turned in for years. Over the last five years, an investor who had faithfully put in $500 a month into that gold fund lost money on the investment.
Investors who did the same over the last 10 years are only slightly in the black. And they have only about two-thirds what they would if they had simply invested in a broad U.S. stock market fund.
The AP analysis, using data from FactSet, shows that the top-performer over the past 10 years for regular investors — those who invest a portion of their income every month and hold for the long term — has been U.S. stocks. That period includes the entire Great Recession, which caused stocks to lose more than half their value and terrified retirement savers.
Someone who put in $500 every month into a broad U.S. stock fund over the last decade would have $101,181 today, a gain of $41,181 on the $60,000 they invested over that time.
A small subset of the U.S. stock market, real-estate investment trusts, has performed even better, a surprise considering the real-estate bubble is what got the economy into its mess. But REITs rebounded strongly following the financial crisis because they tend to pay relatively big dividends, and investors were hungry for income in a low-interest rate world.
Someone who had the patience and wherewithal to keep putting $500 monthly into a REIT fund over the last decade would have $107,918 today on that $60,000 investment.
The weakest performers over the last decade have been foreign stock funds, particularly those that focus on China, Brazil and other developing economies. These emerging-market stock funds were some of the hottest investments in the mid-2000s, but they have struggled mightily over the last year amid slowing economic growth. Periodic investments in an index fund focused on emerging markets would have lost money over the last year and five years, and over 10 years would have generated the smallest gain of the 10 investments studied by AP.