What Various Assets Can Do (or can’t do)

2 min

Once you recognize what the various asset classes do or don’t do for your wealth, you’ll understand what role stocks should play. And you’ll probably jump right in to adjust your holdings.

Play around with this tool a little. I bet you’ll be surprised. Not least after seeing the overwhelming effect of inflation over relevant periods of time.

The influences of wars, crises and happy years are no less revealing.

Take a look at what would have happened if you had received USD 5.000 in gold, real estate or government bonds when you were born. Or what your child would own today if you had given them a broadly diversified stock portfolio instead of a savings account when they were born.

Or test yourself before you start playing around with the tool: You find out today that your ancestors had invested USD 500 each in gold and shares at the beginning of Germany’s darkest period (1933). You inherit one of the two and have to make a spontaneous decision¹ yes, it is indeed 63k : 9,7M.

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Only historical data from the USA is used because this is where the best quality data is available.
The 20th century was the century of the USA. The returns, especially those of equities, enjoy a corresponding bonus. For a globally diversified portfolio, returns should be assumed to be around 15% lower (e.g. only 4.5% p.a. instead of 5% p.a.).