Roth or 401k which should I max out first? asked Buck Inspire

This is an excellent question: which to max out first, a 401k or Roth IRA?

The easy answer, max out both the 401K and the Roth IRA! You can’t go wrong saving and investing as much as you possibly can now.

This article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link.

What if I Can’t Max out Both My Roth IRA and 401K?

In the real world we all need to make financial choices. Most investors can’t afford to max out their 401k and their IRA. So, how to allocate retirement funds is a common question.

If you can afford to max out both, here are the contribution limits for 2026:

Higher income earners may not be able to participate in both a 401k and a Roth IRA.

Following are the 2026 Roth IRA contribution and phase-out ranges, based upon taxable income:

Find more money to invest; 7 Unique Ways to Save Money

Which to Max out First – 401k or Roth IRA?

First, if your company matches your 401k investment, make sure to contribute enough to get the employer match.

After you receive the free employer money, then the decision whether to go with the Roth or 401k depends on several factors.

The Pros and Cons of a 401k vs. a Roth IRA Retirement Account

401k Pros

An advantage of the 401k over a Roth IRA is that your contributions are tax deferred which means your taxable income is reduced by every dollar that’s paid into the 401k. So, if you make $70,000 and contribute $10,000 to your 401k then you’re only taxed on $60,000 of income (for Federal taxes- state policies vary). 

Assuming solid, low fee investment choices and the ability to defer taxes, it makes sense to max out your 401k contribution.

401k Cons

There are several disadvantages to investing in a 401k. You might not like the investment choices offered by your employer. Another disadvantage of investing in a 401k over a Roth is that you must start withdrawing your 401k funds between ages 72 and 75, depending upon your birth year. And you have limited investment options in your 401k. There are a much wider range of investment choices in a self-directed Roth IRA.

Required Minimum Distributions Ages

Read this article if you are experiencing retirement anxiety?

Ultimately, if you don’t like the available choices in your 401k, then invest only up to the employer match and invest the maximum in a Roth IRA for the rest of your retirement investing. 

If you like the choices and appreciate the opportunity to reduce your current tax bill, then invest as much as possible in the 401k. 

Bonus; Fidelity Retirement Savings Guidelines

Roth IRA Pros

The advantages of investing in a Roth IRA, or Roth 401k, are that you are not required to withdraw the money during your lifetime and the invested funds continue to grow and can even be passed on to your heirs. While most non-spouse heirs must now withdraw all inherited IRA funds within 10 years, certain ‘eligible’ beneficiaries—like spouses or those with disabilities—may still have more flexible options.

Among the greatest benefit of investing in a Roth IRA versus a 401k is that in most cases, withdrawals are tax free. In order for the Roth IRA funds to be withdrawn tax-free, they must meet these conditions:

• The 5-Year Rule: The account must have been open for at least five years (starting from Jan 1st of the year of your first contribution).
• The Event Rule: The withdrawal must occur after you reach age 59½, or due to death, disability, or a first-time home purchase (up to a $10,000 lifetime limit).

Roth IRA Cons

A disadvantage of investing in a Roth IRA is that you must pay income tax on the money before investing in your Roth IRA.

Another disadvantage of Roth IRA investing is that high income investors might not be able to participate. Check the chart above for specific limits. In that case, a Traditional IRA might be another option.

If you’re eligible, a Roth IRA is an outstanding wealth preservation and wealth transfer account. 

401k or Roth IRA – Predicting the Future

Another factor in your investment choice is your future tax bracket.

I don’t know about you, but I’m not a fortune teller. Although, I expect that tax rates will be higher in the future, since they at historically low levels now.

But, I’m not sure if my personal tax rate will be higher or lower at retirement. In retirement, my salary income will be eliminated and I’ll be living on pension income , Social Security and our invested assets. So, I assume my retirement income will be lower than our family income is now. But, tax rates could rise. And I will need to withdraw funds (RMD) from my 401k account.

So, it’s possible that tax rates will be higher in the future, and income levels might be lower. 

If you really need a tax break now because your income and tax brackets are high, and you think that they will be lower in the future, then the 401k may be the one to max out first. That is, as long as you are happy with the investment choices available in the 401k.

Read now; 5 Ways to Make Sure You Conquer Your Financial Goals

Finally, in the future, you’ll pay tax on the 401k withdrawals which must begin between ages 72 and 75. And, you never need to withdraw your Roth IRA savings, if you don’t want to.

Bonus Roth IRA Investing Idea

One benefit of a Roth IRA, is that you might encourage your kid to start a Roth IRA, with her summer earnings. A kid Roth IRA could actually make her a millionaire, by starting to invest early!

Ultimately, there’s no way to determine the perfect answer to this question now. The best answer is make sure to save and invest as much as you possibly can now. Look at the pros and cons of each option, then make your best decision.

Related

• The Truth About The 401k – Myths Exposed
• How Can I Tell If I’m On Track For Retirement?
• How To Save For Retirement At 30 And Become A Millionaire?
• How To Start Investing For Women

Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link. That said, I never recommend anything I don’t believe is valuable.

The post Roth or 401k, Which to Max Out First? appeared first on Barbara Friedberg.

Yet, achieving this reality can deliver “retirement anxiety” including stressors and issues, you never considered.

This article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link.

Learn How to:

• Overcome Retirement Anxiety: Why reaching your financial “enough” number can unexpectedly trigger stress and identity loss.
• Mental Frameworks for Retirement Transition: Using CBT and Socratic questioning to challenge fears of worthlessness or financial insecurity.
• Define Purpose & Legacy: Shifting from a “saving mindset” to intentional spending and rediscovering your significance outside of a job title.
• Flexible Time Management: Tips for structuring a routine that balances personal growth, social connection and meaningful experiences.

The Unexpected Challenge of “Having Enough”

You’re in a unique club, one that you might be hesitant to acknowledge. You’re financially secure, you have time freedom and yet you may feel uneasy, anxious and without direction. You’ve spent years planning for a secure retirement, but no time planning what to do, when you achieve your goal. This article will touch on your retirement purpose, now after leaving the workforce, your identity, time, money and your legacy.

Why Reaching “Enough” Can Trigger Unexpected Stress

We’ve all experienced major life transitions; our first apartment, job, house, spouse and more. These types of changes, earlier in our lives, were usually exciting and led to new and bigger lives. These are the challenges and glories of adulthood.

Retirement signals the passage of time, towards the end of life. It can indicate the end of a satisfying career, work friends and status. You might wonder, who am I, if I don’t have my job title? Several research studies, cited in a Harvard Business Review article entitled, “Coping With the Stress of Retirement,” by Ruth C. White, claim that some retirees experience increasing rates of depression and some memory impairment. The following retirement strategies can help.

Despite having enough money saved, retirees might fear spending and feel pressure to be “perfect” in how they spend their remaining time. Fortunately, the emotional side of retirement can be improved by tackling the sources of your retirement anxiety and developing a plan for the next life stage.

If you need help with your investments, we’ve partnered with WiserAdvisor to provide you with access to three vetted Financial Advisors – in your area. Click the image below to sign up. (no obligation when signing up)

Tackle Your Retirement Stressors Head On

Cognitive Behavioral Therapy (CBT) offers strategies that you can practice on your own, or with a licensed therapist to cope with your “Retirement Fears.” Strategies as simple as thought analyses and Socratic questioning are a great start. Jeremy Sutton, PhD, does a great job explaining how to effectively use Socratic questioning in, “Socratic Questioning in Psychology: Examples and Techniques,” on the PositivePsychology website.

Simple steps to tackle retirement anxiety:

1. List your retirement worries, such as, “I’m worthless,” “I’ll waste the rest of my life” or “I’ll run out of money.”
2. Next, challenge each worry. List all of the reasons that this worry might not come true. For example, to challenge the “I’m worthless now that I’m retired,” fear you might write down: “I still have people that depend on me.” “I’m worthy as a human being, not for what I do.” “I can continue making a contribution in the world, without paid work.”
3. Review your list of retirement fears and worries, along with your refutations of those beliefs. Finally write more reasonable responses to your retirement anxieties such as; “I’m in a normal life transition. I have value and an opportunity to craft a worthy life for my next stage. My worth is not determined by a hefty W-2, net worth statement or a job title.”

Allow yourself some time to get used to the retirement stage of life and define your retirement, on your own terms.

Define Your Retirement Purpose (Because Money Isn’t the Driver Anymore)

We all need to feel worthy, valued and significant. Remember that it took years to adapt to adulthood, living on our own, developing a career and meeting the various tasks of early adulthood and middle age. It would be unreasonable that we can pop into retirement without a hitch. Many like to transition gradually into retirement, if possible. For example, cut back on work, or work part time in the beginning stages of work, as you simultaneously define your purpose.

Don’t expect to find your retirement purpose overnight. Allow yourself a period of transition and even grieving as you move from a full-time working adult to retiree.

The options for retirement pastimes are endless, but, what works for you is what matters. We all know of people who love to travel, take courses, volunteer and more. Others have hobbies and pastimes that fill their retirement hours. Some want to maintain a goal-driven life in retirement by running races, competing in gaming tournaments or learning a language. A close friend dipped her toes into sewing, candle making, teaching dance (she’s certified), volunteering at the SPCA, going on retreats and travel. Some pursuits fit, while others, not so much.

If you have enough money in retirement, you can afford to dabble and find the activities that work for you.

Harvard studied four generations of participants and surveyed more than 2,000 participants over 8 decades to understand the distinction between adults with meaning, connection and purpose and those without. The “Maps for Life Transitions,” website delivers resources to aid with these major factors, in creating a meaningful life:

• Life stages
• Values and Purpose
• Life-Affirming Relationships
• Life Transitions
• Responding to Challenges

Fortunately, there are solutions to living a meaningful retirement life, that you have the opportunity to uncover.

If you need help with your investments, we’ve partnered with WiserAdvisor to provide you with access to three vetted Financial Advisors – in your area. Click the image below to sign up. (no obligation when signing up)

Spend With Intention

Those who have lived simply, saved and invested to build a successful retirement can be at a loss at retirement. The power of compounding wealth, accompanied by recent decades of high stock market returns has left some retirees with more money than expected. As previously mentioned, this can be a blessing and a curse.

The opportunity to spend more money in retirement than during your prior working years can feel “wrong.” After all, you’ve built up smart saving and spending habits that have served you well for decades. Even though you can spend more, doesn’t mean that you must. Many retirees have no desire to change their lifestyle in any significant way.

Yet, knowing that you have more than enough money in retirement, means that you can make consious decisions to spend more on what matters to you. It might not be a bigger home or luxury car, but you might relish the idea of treating the entire family to a vacation each year. These special occasions create priceless memories and direct your retirement dollars to the people that matter most to you.

Others have causes, dear to their hearts, and might want to set up charitable giving to make a significant impact. Legacy funds set a model for future generations of charity and selfless concern for others.

In lieu of waiting until your passing, you might consider disbursing some of your wealth to your heirs sooner. During mid-life, many responsible adult children can make good use of financial assistance that would be less meaningful in several decades.

Intentional spending in retirement can lead to joy and alleviate any guilt you might have about your financial choices in retirement.

Create a Flexible Plan for Your Time

Time structure was crucial while working. If you didn’t complete your high priority items, there were consequences.

In retirement, time structure is equally important, although more for your mental well being, than your financial. It’s easy to become mired in worry and anxiety, if you have no retirement plan and too much free time. Living deliberately in retirement and choosing how to spend your time interweaves purpose into your routine. Through the previous exercises and discussion, you should have an idea of what will be important during the next stage of life.

Turning your ideas into actions, ramps up your fulfillment in retirement. If making a daily to do list helped you structure your time previously, consider this life hack in retirement. Scheduling in time blocks for your activities; exercise, hobbies, socializing and volunteering can create a full retirement life. Learn to reprogram you thinking and consider “doing nothing” okay as well.

Some retirees over book their time and consequently sabotage the enjoyment of their later years. Too much structure can be just as bad as not enough.

Give yourself permission to experience all of the feelings that accompany the transition into retirement.

If you need help with your investments, we’ve partnered with WiserAdvisor to provide you with access to three vetted Financial Advisors – in your area. Click the image below to sign up. (no obligation when signing up)

Summary: Navigating the Emotional Complexity of Financial Independence

This article explores the phenomenon of retirement anxiety, a common but often ignored stressor for those who have officially achieved their “enough” number. While many focus solely on financial security, reaching this milestone can trigger an identity crisis, loss of status and fear of the future. By utilizing simple strategies like Socratic questioning and Cognitive Behavioral Therapy (CBT), retirees can move past their retirement fears and define their retirement purpose through intentional living. A successful retirement transition requires more than a healthy bank account; it demands an intentional evaluation of what matters to you and how you want your life to proceed. You can find contentment in this next stage by balancing growth, connection, joy and finances.

Related

• Rebalancing Your Investments And Other First World Problems
• How To Retire Successfully; 14 Tips From The Retiree Next Door
• Can I Retire At 60 With $500,000?
• 8 Retirement Planning Tips For 50 Year Olds
• 9 Biggest Retirement Planning Mistakes

If you need help with your investments, we’ve partnered with WiserAdvisor to provide you with access to three vetted Financial Advisors – in your area. Click the image below to sign up. (no obligation when signing up)

Sources

• https://hbr.org/2024/05/coping-with-the-stress-of-retirement
• https://positivepsychology.com/socratic-questioning

Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link. That said, I never recommend anything I don’t  believe is valuable.

The post Retirees: What To Do When You Have Enough? (And Why It’s More Complicated Than You Think) appeared first on Barbara Friedberg.

Doubling a net worth of $500,000 is a significant financial milestone. Whether this happens in five years or twenty depends entirely on the levers of risk, time, and strategy. While a starting $500,000 net worth is great, these strategies work for anyone looking to grow wealth, regardless of how much money they currently have.

Here’s a comprehensive guide, which tackles the core pillars of wealth building and specific “paths” based on your personal risk profile and timeline.

This article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link.

The Rule of 72 – Wealth Building Secret

This calculation provides an easy way to find out how long it will take to double an investment, if you know the anticipated rate of return or interest rate.

Divide the expected rate of return by 72, and this gives you an estimate of how long it will take your money to double. For example, with an expected annual rate of return of 10%, it will take roughly 7.2 years for your investment to double.

Time (in years) until investment is doubled = 72/annual rate of return

If you invest $500,000 in an investment which earns 10% annually, you’ll double your money in approximately seven years.

The rule of 72 illustrates the power of compound interest.

How Long it Takes to Double Your Money

1. The Core Variables

Before picking an investment, consider these three things:

• Risk Tolerance: This is the “sleep at night” factor. High-risk paths (like individual stocks or crypto) can double money quickly but can also lead to steep losses. Low-risk paths (like bonds) deliver more stable returns, but slow growth.
• Time Horizon: The “Rule of 72” is the best tool here. Divide 72 by the expected annual return to see how many years it takes to double:
  • At 7% return (Historical stock market average after inflation): ~10.3 years.
  • At 10% return (S&P 500 historical average): ~7.2 years.
  • At 4% return (Conservative bonds/HYSA): 18 years.
• Investment Savvy: Do you want to be a “passive” passenger or an “active” pilot? Passive investors should stick to Index Funds; active investors might look at real estate, active investing strategies or business ventures.

Your financial goals, risk tolerance and willingness to spend time educating yourself in investing strategies will drive your decision. After decades of investing, studying the investment research and the markets, the data is clear. Most active investors typically underperform the market indexes. Check out our historical asset class performance article to understand how the market indexes have performed over time.

2. Strategies to Double $500k

Here are four distinct paths, ranging from conservative to aggressive.

Path A: The “Conservative Path” (Bonds and Cash predominantly)

• The Strategy: Invest the $500k into a conservative asset allocation of roughly 75% bonds/high yield cash and 25% broad-market ETF (like VTI or VOO) that tracks the total US stock market or S&P 500 or VT, Vanguard Total World Stock Index Fund ETF, which provides access to the entire world stock market within one fund.
• Potential Gains: Historically 4-5% annually.
• Risks: Declining interest rates can hurt long term capital appreciation.
• Timeline to $1M: 14-18 years.

Path B: The “Balanced Shield” (60/40 Portfolio)

• The Strategy: 60% Stocks, 40% Bonds. This is for the reader with a lower risk tolerance and less interest in stock picking and portfolio management.
• Potential Gains: Generally, 5–7% annually, depending upon the performance of the financial markets.
• Risks: Lower growth. Inflation risk could stifle growth when your money grows, but its purchasing power doesn’t keep up with the cost of living. Stock market declines can also hinder how long it’ll take to double your money.
• Timeline to $1M: 10-14 years.

This is the path that my family has taken over years, with adjustments in the asset allocation from 60% stocks / 40% bonds to more aggressive 70%/30% allocations. Over decades, with regular additions into our financial accounts, compounding has worked its magic.

Path C: The “Lumberjack” (Real Estate Leverage)

• The Strategy: Instead of buying one property with cash, use the $500k as 25% down payments on four $500k rental properties (totaling $2M in real estate).
• Potential Gains: You aren’t just gaining on your $500k; you are gaining appreciation on the full $2M value. A 5% increase in property value ($100k) is a 20% return on your actual cash. The leverage of borrowing to help pay for the properties can rapidly increase returns, in a strong market.
• Risks: Leverage is a double-edged sword. If property values drop, you still owe the full mortgage. There is also “tenant risk” and maintenance costs.
• Timeline to $1M: Could be 5 years or less, depending on appreciation and mortgage pay-down.

Other issues to consider with this real estate strategy are finding properties that are fairly priced and affordable. On the east and west coasts, real estate costs are sky-high and it’s tough to find a rental property for $500,000. Higher mortgage rates will lower your returns as well. This type of strategy is better in areas with more affordable real estate, with a strong rental market. If you can provide “sweat equity” for repairs and maintenance and have the time to manage the properties yourself, you’ll boost your financial potential.

Also, real estate investments are less liquid than investing in the financial markets, where you can buy and sell stock and bond funds with the click of a button.

Path D: The “Speculator” (Alternative Assets)

• The Strategy: Allocating a portion (e.g., 10–20%) into high-growth, high-volatility assets like Bitcoin, early-stage startups (Angel investing), alternative investments or sector-specific tech stocks and riskier growth stocks and funds.
• Potential Gains: 20%+ or even “10x” returns.
• Risks: Extreme. You could lose the entire principal of that portion. This should only be done with a percent of your net worth, as you could risk great losses.
• Timeline to $1M: Could be 1–3 years (or never).

Typically, I suggest that more aggressive investors deploy 5 to 10% of their investable assets into riskier investments. This provides the opportunity for high returns and capped losses. Some alternative investments are illiquid, so you’ll need to keep your capital invested for long periods of time, before realizing potential gains.

Pro Tip: Keep some cash on the side, so when stocks, crypto, alternatives and other investments take a dive, you can pick up shares at bargain prices. This enables greater future growth potential.

3. Comparison Table

Realize that no returns are guaranteed. We use prior returns to predict the future, but the future returns are unknowable. The riskier the investment, the greater chance of outsized gains and losses.

4. Immediate Steps to Take

1. Max Out Tax-Advantaged Accounts: If you are still working, and have access to a 401k, 403b or IRA, make sure to contribute as much as you can. If your employer matches your 401k or 403b investment, contribute at least the necessary amount to receive the employer match.
2. Assess “The Gap”: If you want to double your money in 5 years but only have a “Conservative” risk tolerance, your goals and reality are mismatched. You must either increase your risk tolerance or extend your timeline.
3. Minimize Fees: A 1% management fee might seem small, but on $500k, that’s $5,000 a year gone. Over 10 years, that eats a massive chunk of the compounding effect.

Investing Resources to Help Increase Your Net Worth

Recommended Tools for Today’s Economy

• Empower: Free tracker for net worth, investment allocation, and retirement projections. (I use the free tools)
• Groundfloor: Real estate investing with small minimums—even in IRAs (I have an account)
• M1 Finance: Automate investing and easily rebalance with no management fees (I have an account)
• Vaulted: Invest in real gold and silver with low fees and minimums.
• Free Microbook: “Invest and Grow Your Wealth”: Actionable advice for smarter investing

Related

• How To Invest $500,000 For Income and Growth?
• Can I Retire At 60 With $500,000?
• Robo-Advisor VS Target Date Fund – Which Investment Strategy Is Right For You?
• The Magic of Compounding Stocks-Get Rich While You Sleep

Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link. That said, I never recommend anything I don’t  believe is valuable.

The post How To Double Your Net Worth Of $500,000 To $1 Million appeared first on Barbara Friedberg.

Millennial women, we have a lot going on right now. We’re fighting for equal pay while simultaneously facing difficult employment prospects, crippling student loan debt, and inflation that makes it tricky to afford having a family and homeownership simultaneously.

None of that is a reason to let our investments fall by the wayside, however. If anything, millennial women need to have even more resiliency and financial know-how than former generations. Since many of us graduated college or were in the early stages of our careers during the Great Recession, we are facing challenges the women of prior generations did not.

This article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link.

If you’re not sure where to start, don’t panic. We’ve compiled the best investment advice for millennial women right here so you can be sure your money is working just as hard as you are.

Read on for 5 tips to become an investor.

Tip 1: Educate Yourself (It’s Easier than You Think!)

If you’re worried that learning how to invest is going to be complicated, you’re in good company. Lack of knowledge, perceived or actual, is one of the biggest factors keeping millennial women from investing. This puts them at a distinct disadvantage when compared to their male counterparts.

Many women do save money, of course, but they tend to keep their money in liquid or semi-liquid accounts such as money markets and CDs. These accounts have such little growth potential that Time Money estimates women on average have one million dollars less than men do upon retirement.

Shocking, right? To counteract this gap, I give you the best investment advice for millennial women (or anyone, really): educate yourself.

Quick read to get you started wealth building and investing – How to Get Rich; Without Winning the Lottery

A word of caution, though. Don’t let the quest for knowledge keep you from actually investing. An afternoon of thoughtful Googling (or staying right here and perusing our blog!) can give you enough information to help you start investing today.

You can start educating yourself right now without even leaving this site. Get more of the best investment advice for millennial women here!

Tip 2: Retirement Planning Strategies for Women in Their 30s

The millennial age range is wide, but no matter where you fall you should be thinking about retirement now. Social Security is in desperate straits and gone are the days when the employer pension would cover all of your retirement needs.

The amount of money a millennial will need a retirement varies depending on where you look, but most credible sources quote around 1.5 million as a good benchmark, especially if you plan to live on roughly $50,000 per year.

There is proof that the earlier you start planning for retirement the better off you will be; however, starting late is much better than not starting at all! Don’t let the charts scare or paralyze you into inaction. If you have access to a 401k at work, start maxing out your employer matching. If not, look to other retirement options such as IRAs. Every little bit helps.

Tip 3: Diversify Your Investments to Balance Risk

Nobody likes to lose money, and sometimes it can seem like investing is just a gigantic gamble. We all know we can’t predict the stock market, so why place our hard-earned money in something we can’t control?

When I think about my best investment advice for millennial women, I have to include this tip: don’t shy away from risk!

It is very safe to leave your money in a CD. It is also very unproductive from a financial standpoint. Even if you left $10,000 in a CD for a year, the current rates would net you somewhere around $250 in interest if you’re lucky—many will bring in much less. You can make a lot more than that with other types of investing, but you do need to be open to the idea of risk.

As you learn more about investing, you’ll realize that there are all sorts of investment risk options to choose from. A strong investment portfolio is a balanced investment portfolio, so familiarize yourself with some of the basics of investing before choosing a few, varied options.

Tip 4: Think Long-Term

You could get immensely lucky and buy stocks in the next Facebook or Bitcoin. More likely, however, is that you will need to play a bit of a waiting game. On the plus side, as millennials we have time.

Know that the market will fluctuate but having time before retirement will help you ride out these fluctuations. Some of the best investment advice for millennial women (or for others looking to make money on investing) includes taking the slow and steady route to growing wealth.

This is where millennial women definitely have the advantage. Although we are frequently cited as feeling underprepared to invest, we are also, on average, better at riding out the rough times in the market and waiting for the uptick. This patient and calm approach to investing can make a huge difference in our financial success.

Tip 5: Don’t Let Fear Stop You

This is a big one. You shouldn’t let fear make investing decisions for you.

Now, a healthy dose of skepticism and caution will go a long way in investing. You might not want to buy into the newest Initial Public Offering (IPO) because they have no growth history to research—even if everyone else is getting excited about the product this company sells. This is probably a good investment option to pass on.

But don’t let full blown fear keep your cash in the bank vault, either. Without some risk, it’s unlikely you will see any substantial growth in your finances over your lifetime. Remember tips 3 and 4 as ways to calm your nerves. First, you should aim for a diversified portfolio so that some of your money is in higher risk investments, while other money is invested in low-risk funds. Second, remember that investing is a long-term strategy for building wealth, and don’t run screaming after your first loss. Time is on your side.

FAQ

Recap: The Best Investment Advice for Millennial Women

Building lasting wealth doesn’t require a background in finance; it starts with the courage to take that first step. By following this investment advice for millennial women—educating yourself, starting early, and embracing a long-term, diversified strategy—you can overcome the gender wealth gap and secure your financial future. Remember, time is your greatest asset, so don’t let fear keep your money on the sidelines. Start investing today to harness the power of compound interest and turn your financial goals into a reality. Ready to take control? Download my free micro book by completing the quick form below.

Related

• Become a Millionaire in One Step
• Warren Buffett’s Best Investment Tips
• Best Personal Investment Advice for Women
• Lazy Portfolio Basics: Low Cost Wealth Building
• Best Investing Podcasts

Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link. That said, I never recommend anything I don’t believe is valuable.

The post Best Investment Advice for Millennial Women – 5 Tips appeared first on Barbara Friedberg.

With the popularity of bitcoin, cryptocurrency, crowdfunding and peer-to-peer lending, investing has gone from just stocks and bonds to vast investment choices. With the promise of massive returns, readers frequently ask, “I’ve been thinking about “What percent of my portfolio should be invested in speculative assets like crypto, crowdfunding, IPOs, private equity and more.

What are Speculative Investments?

Financial speculation promises higher returns in exchange for the promise of higher returns. When shooting for sky high investment returns, like more than 10% annually, be prepared for the possibility of losing all or a majority of your investment

This article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link.

8 Examples of Speculative Investments

• Foreign Currencies
• Private Equity
• Precious Metals
• Cryptocurrencies
• Margin Trading
• Penny Stocks
• Options Trading
• Day Trading
• IPO’s
• Crowdfunding

How Does Speculation Work?

Speculative investing depends upon the asset that you’re investing in.

With day trading, you’ll buy and sell securities quickly to capitalize on small price movements. With crowdfunding apps such as Groundfloor, you’ll set up a bank transfer into a debt fund, in exchange for cash flow. Margin trading requires borrowing money to invest in the financial markets with a risk of a “margin call” (to add more money) should the investment value decline. Private equity funds have application procedures on their websites and might be available only to accredited investors. Invest in crypto through a portal such as Coinbase, an app like Robinhood or an ETF.

Speculation vs Investing – What’s the Difference?

Investing vs speculating involves risk and probabilities.

The stock market returned north of 10% annualized over the last hundred years or so. While bonds averaged approximately 5%. Investing in a diversified portfolio of stocks and bonds both individually and through mutual and exchange traded funds, for long term profits is considered investing.

Long term investing typically yields positive investment returns, despite short-term price volatility. Some investments such as stocks and bonds offer dividends or cash flow, to cushion any declines in the investment’s value.

Speculative investments promise higher returns than typical stocks and bonds and are riskier. The speculative investment decision requires an investor to be willing lose a large portion of their initial investment, in exchange for the possibility of outsized returns. Some speculative investments, such as private equity, require that you lock-up your capital for years, with the expectation of higher long term returns. Other speculative investments such as cryptocurrency deliver extreme volatility and large potential losses.

Before Investing in Speculative Assets – Understand Your Risk Tolerance

Before considering what percent to invest in speculative investments, take a quick risk quiz and figure out your risk tolerance.  If you can’t tolerate big investment losses, you probably shouldn’t consider speculative investments.

First question, ask yourself how you will feel if you lose 100 percent of your speculative investment. That is possible with speculative investments.

In January, 2026, Bitcoin is trading at $90,000, down from a high of $124,000 per share in October, 2025. How would you feel if you invested in Bitcoin at $124,000 in October and lost 27% of your investment in three months? Can you tolerate this type of volatility?

Use your response to that question to guide your speculative asset investment decision.

If you don’t mind risk and can still sleep if your portfolio makes a double digit fall, then consider a maximum of 10 percent in speculative assets. Younger investors, with more time to make up investment losses, can afford to invest more in speculative assets.

Pros and Cons of Speculative Investments

The Pros: Why Speculate?

• Asymmetric Returns: The primary appeal remains the “moonshot” potential. A small, disciplined allocation (e.g., 2% of a portfolio) can generate returns that far outweigh the initial risk, potentially “fast-tracking” financial goals.
• Portfolio Diversification: Many speculative assets (like commodities or niche alternatives) have a low correlation with the S&P 500.
• Capital Efficiency: Through the use of leverage (margin or options), you can control a large position with a small amount of capital, allowing you to keep the rest of your cash in safer, interest-bearing accounts.

The Cons: The Hidden Costs

• Greater risk of loss: With speculative investments, you are subject to the possibility of greater losses, than long term investing in the stock and bond markets.
• Market timing is nearly impossible: The retail speculator is now directly competing with sophisticated agentic AI trading models that process news and execute trades in milliseconds. This makes “market timing” for humans nearly impossible in liquid markets like Forex or Mega-cap tech.
• Inflation & Carry Costs can lower returns: Speculative assets that don’t produce income (like gold or non-staking crypto) are riskier because you could be earning 4% in a “risk-free” bond, the “opportunity cost” of holding a non-performing speculative asset is much higher than it was five years ago.

What Percentage of Your Portfolio Should Be in Speculative Investments?

To determine the ideal allocation for high-risk assets in 2026, some financial experts suggest using the Core-Satellite Model. This strategy ensures your foundational wealth is protected while still allowing you to participate in high risk, speculative opportunities.

Under this framework, a common benchmark is to limit speculative investments to 5% to 10% of your total portfolio. This range provides enough exposure to significantly boost your overall returns if a trade succeeds, but it is small enough that a total loss won’t jeopardize your retirement or long-term financial security. If you have a higher risk tolerance or a longer time horizon, you might lean toward 10%, whereas conservative investors often stick to 2% or less.

Whether you’re a risk-seeking aggressive investor or a conservative type, you might want to allocate some portion of your portfolio to speculative investments.

The only criteria for a speculative investor is the willingness to lose all or most of an investment in exchange for great profit potential. That means, if you’re near retirement, or have a limited investment portfolio, you probably don’t want to speculate.

Even if you love researching investments and looking for an arbitrage opportunity (chance to beat the market), consider your chances of long term success. It’s very low. One reason for the decline in success of active traders; today, investors aren’t competing against other traders. They are competing against complicated computer programs, who have no emotions with which to contend. In most cases, the machines are going to win over the individual traders.

Is Speculative Trading for You? – Wrap up

As in most of investing, there is no one right answer. Clearly evaluate your personal situation to decide whether to invest in any speculative assets.

Educate yourself so you know about the risks you are facing. Before I invested in the peer to peer lending platform, I read the Securities and Exchange Commission (SEC) documents. I focused on the risk section. There are great risks in this type of investing!

Be aware of the psychological pull to go with the crowd. Someone is always touting the new market timing system or forex or make it rich with options. Think and evaluate before you invest any of your hard earned money. And evaluate from whom you are getting your investment advice.

Whether you decide to try speculative investments or not, you need to track of your budget, cash flow, net worth, and spending. One of my favorite financial trackers is Empower. I’ve used it for many years and appreciate the free financial management tools.

FAQ

What are some examples of some speculative investments?

Speculative investments include those assets that carry higher than average risk in loss with higher than average potential returns. Speculative investments include:

• Private Equity
• Precious Metals
• Cryptocurrencies
• Margin Trading
• Penny Stocks
• Options Trading
• Day Trading
• IPO’s
• Crowdfunding
• Foreign Currencies

Is speculative investing the same as gambling?

While speculative investing and gambling both involve risking capital for profit, they differ fundamentally. Speculation has a positive expected return based on economic growth, while gambling has a mathematically fixed “house edge” that guarantees a long-term loss.

Speculators use research and technical tools to gain a statistical advantage, whereas most gambling is a game of pure chance where information cannot change the outcome. Ultimately, the distinction lies in the math; a speculator expects to be paid for taking a necessary risk, while a gambler pays for the thrill of an unnecessary one.

Is Bitcoin considered a speculative investment?

Bitcoin is widely classified as a speculative investment because its market value is primarily driven by investor sentiment and future adoption expectations rather than traditional metrics like cash flow, earnings, or dividends. Unlike a stable currency or a productive asset like a stock, Bitcoin experiences extreme price volatility, where double-digit percentage swings can occur within a single day based on regulatory news or social media trends.

While many proponents view Bitcoin as “digital gold” or a hedge against inflation, the lack of an intrinsic floor price means that its value relies on the “greater fool theory”—the belief that someone else will be willing to pay more for it in the future.

Related

• Best ETFs That Short the Market
• Should I Buy A Bitcoin ETF?
• Which Investments Carry The Least Risk?
• 10 Best Alternative Investments
• How Often Should I Check My Investments
• Pros and Cons of M1 Finance

If you need help with your investments, we’ve partnered with WiserAdvisor to provide you with access to three vetted Financial Advisors – in your area. Click the image below to sign up. (no obligation when signing up)

Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link. That said, I never recommend anything I don’t believe is valuable.

The post Guide to Speculative Investments – What Percent Should I Invest? appeared first on Barbara Friedberg.

Want to know the secret to building wealth as a woman investor? Here’s a surprising truth: women outperform male investors by 0.4% annually, according to Fidelity’s research on over 5 million investors. Yet despite this proven success, 58% of women report lacking confidence in their investment decisions. If you’re ready to overcome investment anxiety and start building real wealth—this guide reveals the exact investment strategy for women that has helped countless female investors achieve millionaire status by retirement. As a former portfolio manager and university finance instructor with decades of investing experience, I’ll show you why investing for women beginners is simpler than you think, and how you can start today with a proven, low-stress approach that actually works.

This article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link.

Key Takeaways: Investment Strategy for Women

In this comprehensive guide, you’ll discover:

Why women are naturally better investors – and how to leverage your strengths for maximum returns.

The simple 6-step investment strategy that beats 80% of professional fund managers (without the complex jargon).

How to become a millionaire by 65 – starting at age 40 with just $1,236 per month in strategic investments.

Best investment tips for women beginners – including exact fund recommendations with fees under 0.05%.

How to invest with confidence – even if you’ve never opened a brokerage account before

Asset allocation secrets – the 60/40 portfolio strategy that generated 8.66% average annual returns over 97 years

Free tools and calculators – to help you start investing today, no financial advisor required

Bottom line: You don’t need to be a finance expert to build lasting wealth. Women who follow these proven strategies consistently outperform men—and I’ll show you exactly how to start investing for women in 2026 with confidence and clarity.

What is the Best Investment Strategy for a Woman?

Long term, investing in the financial markets is a brilliant way to build wealth. Investing in a diversified portfolio of low fee index funds, in line with your risk tolerance, leads to long term wealth. Although female investors might lack confidence in managing an investment portfolio, women’s past investment performance typically surpasses that of their male counterparts. Simple investment strategies like passive index fund investing, outperforms active trading and attempting to time the markets.

Women investors, striving for financial security benefit from creating a financial plan and understanding investment history. Women who understand investment history, gain confidence and are less likely to flee the markets after the occasional stock market decline.

Data source; http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

For the past 97 years, stocks returned 10.02%, bonds, 6.62% and cash 3.32%. In every subsequent period, you’ll the stock market, dominated returns, with bonds and cash following. Clearly, to meet your financial goals, women must understand that the stock market has delivered the highest long-term returns, albeit with the greatest amount of volatility.

In reality, many investors do not achieve the average annualized return over time on their long term stock investments, because they trade in and out of the markets. Fortunately, women investors are more likely to stay the course and not attempt to outperform the investment markets. Investors with the lowest returns tend to sell after a loss and buy back in after the investment rebounds, leading to sub par returns.

Consider WiserAdvisor if you’re looking for help with investing:

6 Investment Tips for Womeninners

1. Invest for the long term. If you cannot leave your money in a stock index fund, for at least 8-10 years, do not invest. Markets are volatile and over the short term, your returns are random. Over the long term if you believe U.S. and global companies will grow and prosper, then their underlying stocks will advance as well.

2. Cut investment expenses to the bone. Realize that investment expenses are taken off the top. If you invest in a managed mutual fund charging 1% per year, then out of every $1,000 you invest, only $990 is going towards building wealth. Many low fee index ETFs charge negligible fees. For example, VTI, Vanguard Total Market Index ETF and BND, Vanguard Total Bond ETF charge, 0.03% per year while the category average is 0.33+%. Less money toward annual management fees means more money in your pocket.

3. Don’t fight the market. Accept the fact that it is highly unlikely that you will beat the market, so choose diversified low fee investment funds for your portfolio. Active investors, those that think they can beat the average market returns by buying and selling, typically deliver lower returns than passive, lazy, index fund investors.

4. Choose your asset allocation carefully. Divide your investment pie among stock index mutual funds or ETFs, and fixed income investments like bonds and cash. Plan your investment pie according to how much risk or volatility you can stomach. If you are risk averse and don’t like the ups and downs in value of stock investments then place a smaller percent in those types of financial assets and skew your asset allocation toward a greater percent in bonds and fixed income assets.

For low fee model portfolios, check out one of my favorite investment platforms, M1 Finance.

5. Stick with your plan through market downturns. No one has a problem when their investment values surge. The problem comes when fear kicks in and you get scared during market downturns. I know more than a few folks who let fear get the best of them and sold during market downturns only to miss the subsequent rebound.

If you sell during a market downturn, you have to be right twice, once when you sell and another time when you buy back in.

6. Seek investment advice from a financial advisor or robo-advisor. Financial advisors can offer support with your investment decisions including crafting long term goals and saving strategies. Ellevest offers a low-fee robo-advisor with access to discounted financial advisory advice. While WiserAdvisor will match you with three fee-only, vetted financial advisors.

Women, Become a Millionaire in 25 Years of Investing

Here’s how women can become millionaires by investing, even when you start at age 40.

Women, become a millionaire by age 65, even if you have not begun investing and have nothing saved at age 40. A woman could start investing $1,236 per month in a portfolio equally divided between a U.S. stock index fund, an international stock index fund, and a diversified bond fund. You can choose a mutual fund or an ETF. 

Review; Quicken vs. Empower – Which is the Best Money Management Tool?

Assume historical returns prevail. If you earn 6.9% annually, then at the end of 25 years, your $370,800 investment will be worth $1,000,000.

Of course, if you start investing younger, you can achieve $1,000,000 with less money.

Start at age 25 and you only need to invest $385 per month to achieve $1,000,000 by retirement. And if your employer kicks into your 401k retirement account, you can invest less and still reach $1,000,000 or more by retirement.

Asset allocation secrets

Women, here’s the the 60/40 portfolio strategy that generated 8.66% average annual returns over nearly 100 years.

Invest 60% of your portfolio in a diversified stock ETF, similar to this all-world stock fund by Vanguard (VT). Invest the remaining 40% in a diversified bond ETF such as Vanguard Total Bond Market ETF (BND).

The recent decade and the 50-year annualized returns of the 60/40 balanced portfolio enjoyed tremendous growth, due to the robust stock market returns. Despite periodic market declines, those smart women investors (and men) who chose a conservative asset allocation, reinvested dividends and stayed invested over decades, built significant wealth.

Women Investing Resources

Here’s some help to get you started with your investing:

1. Best Investment Advice for Millennial Women
2. Free microbook; How to Invest and Grow Your Wealth
3. Free budgeting, cash management, retirement planning, investing dashboard (I use this myself). Sign up required. Sponsored by Empower.

FAQ

How to Start Investing for Women Roadmap

Developing the best personal investment strategy for women isn’t about chasing the latest crypto craze or predicting the next market peak—it’s about consistent, evidence-based habits that protect your financial future. As we navigate the current economic landscape, the fundamentals of building wealth for women (and men) remain centered on low-cost index funds, smart asset allocation and tax-advantaged accounts like a Roth IRA or 401(k). By automating your contributions and maintaining a diversified portfolio, you can combat inflation and rising healthcare costs while ensuring your money works as hard as you do. Whether you are starting with $1,000 or $100,000, the secret to becoming a millionaire is simple: stay the course, minimize fees, and let the power of compounding turn your small monthly investments into a lasting legacy.

Related

• Become A Millionaire In One Step

• Quicken vs Empower – Which Is The Best Money Management App?

• Historical Stock And Bond Returns

• Should I Buy Bonds Now?

• Actionable Investing Tips – Best Strategies For Long Term Investing

Sources:

https://www.massmutual.com/global/media/shared/doc/mm-womens-risk-study.pdf

https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/about-fidelity/FidelityInvestmentsWomen&InvestingStudy2021.pdf

Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link. That said, I never recommend anything I don’t believe is valuable.

The post How To Start Investing For Women  appeared first on Barbara Friedberg.

Historically, long-term returns of the stock market have been positive, as have bonds. But over short periods stock and bond returns might be negative. Therefore, understanding historical stock and bond returns is critical if you want to be a successful investor. Historical stock and bond market returns provide information to help you make wise investment decisions.

Key Takeaways: Historical Investment Performance

• Stocks Outperform Long-Term: Over the last 97 years (1928–2025), the S&P 500 has delivered an average annual geometric return of approximately 10.02% including dividends.
• Bonds Provide Stability: Baa Corporate Bonds averaged a 6.62% annual return since 1928, offering a lower-volatility alternative that often performs well when equities struggle.
• The Power of 60/40: A balanced 60/40 portfolio—60% stocks and 40% bonds—has achieved a long-term average annual return of 8.66%, effectively tempering market swings while maintaining growth.
• Volatility is Normal: While long-term trends are positive, short-term returns can be highly volatile; for instance, stocks saw a -18.04% decline in 2022 followed by a 26.06% surge in 2023.
• Reversion to the Mean: Historical data suggests that extreme periods of overvaluation or undervaluation eventually revert toward long-run averages, reinforcing the importance of a disciplined, long-term investment strategy.

Historical Stock and Bond Returns-Why You Should Care

I’m a bit obsessed with historical stock and bond returns. While the future is unknowable, knowing historical stock and bond returns gives me a tool with which to view the current markets.

If you’re wondering why you should care about the average historical bond returns or stocks historical returns and performance, read on.

Knowing the average portfolio return helps you plan for the growth you might expect from your investments. Many investment calculators ask you to estimate the future return that you expect on your portfolio. Knowing the historical average returns on bonds and stocks is a good starting point to estimate your expected future investment returns.

For example, knowing 60/40 portfolio historical returns helps you estimate whether you’ll meet your financial goals. However, before we dive deeper, let’s understand some basics.

This article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link.

What Are Historical Returns?

Historical investment returns refer to the past performance and rate of return of a financial asset, such as a bond, stock, security, index or fund. For example, The average stock market returns over the past 96 years, as measured by the Standard and Poor’s 500 index is 9.94% including reinvested dividends. 

We consider the geometric, not average annual returns for investments because it includes the effect of compounding growth from different periods of return. The geometric annual average return is considered a more accurate way to measure investment performance.

However, average bond returns by year, historical stock market returns, and even cash performance vary greatly each year. To make better estimates about future returns, it’s helpful to understand the bonds vs stocks historical returns for the last 50 years, 95 years, and 10 years.

Understanding Historical Stock and Bond Returns

To capture a financial asset’s historical returns, analysts and investors record performance from the start of a year (January 1st) to its end (December 31st). Compiling past annual returns helps you accurately picture your investments’ overall historical returns across multiple years. You can also use the same data to calculate average historic yields per year.

However, it’s essential to remember that the average returns fail to address potential changes in the rate of return. Some years may observe substantial growth, while others a decrease in performance. For example during the past five years, you’ll notice extremely divergent returns for stocks, cash, US Treasury and corporate bonds.

Source: https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

Higher return years balance out the lower/negative returns over long periods of time. So, one-year returns might be lower or higher than the average, and rarely equal.

You can also use a historical returns calculator to make more informed decisions and maximize your returns. It calculates the potential return on investment over a period of time. It considers factors such as taxes, inflation, and investment period. You can also use it to compare different investments and choose the one with the best return potential.

Read: Would you Invest in a 100% Muni Bond Portfolio?

If you’re wondering what the average return is for someone invested 100% in bonds, both the US Treasury bond and Baa Corporate Bond returns will give you an idea of how bonds performed in the past. In general, over longer time periods, like seven or more years, stocks performed the best with trailing corporate bonds, government bonds and cash yields.

Average Return on Bonds

Source: https://ycharts.com/indicators/moodys_seasoned_baa_corporate_bond_yield

This 5-Year Average Baa Corporate Bond Yield chart shows the corporate bond yields, or interest payments during the prior five years. The yields along with the underlying bond price or value, will determine your annual return. If you don’t sell the bond, then you’ll receive the stated interest payment, and return of your principal investment, at maturity.

Great – so do historical returns guarantee future returns?

No, not at all.

But, since the perfect crystal ball hasn’t been invented, historical stock and bond returns give you an approximation of how much you might expect to earn on an investment portfolio, over many years. Historical stock and bond returns are the next best thing to the crystal ball.

Is it possible that historical returns have nothing to do with future investment returns?

Of course. But if we accepted that premise, we would lack any guide to approximating future returns. So, we’ll assume that past historical bond and stock, returns can help guide our future projections.

Historical Stock, Bond and Cash Returns

The following chart compares the annual returns of:

• Stocks – Measured by the S&P 500 index with reinvested dividends
• Bonds – Measured by the Baa Corporate Bond index
• Cash – Measured by the 3-month U.S. Treasury bonds

Stocks vs Bonds Historical Returns Chart – 25 Year

 Data source: http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

The annualized returns or Compound Annual Growth Rate (CAGR) for stocks, bonds and cash from 2000 to 2025 is as follows:

• S&P 500 (Stocks): 8.00%
• Baa Corporate Bonds: 6.30%
• 3-month T. Bills (Cash): 1.93%

Key Observations:

• Stock Outperformance: Despite major market crashes in 2000-2002 and 2008, stocks remained the top-performing asset class over the long-term, significantly outpacing both bonds and cash.
• Bond Stability: Baa Corporate Bonds provided a respectable return with considerably less volatility than stocks, making them an essential part of a diversified portfolio.
• Cash Drag: While T-Bills provide the most safety, their CAGR of 1.93% highlights the “inflation risk” of holding too much cash, as it often struggles to keep up with the rising cost of living over decades.

Notice that stock returns are usually higher than bond returns. There are large differences in stock and bond returns from year to year.  During the last 50 years, stocks lost money in only six years, four of which were in the first decade of the new millennium.

The lesson is to keep your eye on stock valuations. When valuations get way ahead of the stocks intrinsic valuation, consider trimming back your stock holdings and shifting into more conservative cash and fixed income.

In some years, stocks and bond returns show an inverse relationship; when stocks go up, bonds go down. Yet, that’s not always the case. In 1995, all asset classes were positive. The S&P 500 returned over 37%, while Treasury bills and Treasury bonds returned 5.52% and 23.48%, respectively.

As high as the returns were in 1995, in 2008, during the subprime mortgage crisis and recession, the S&P 500 declined -36.55%. That same year, the 10-year Treasury bond rewarded fixed income investors with a 20.10% gain, as investors sought safer investments.  

Rarely are stock and bond returns directly correlated. In 2022 stock and bonds both declined in value. In 2022, the S&P 500 lost -18.0% while the Baa Corporate Bond average lost -15.1%. While short-term cash investors held steady with a 2.0% T-bill return in 2022. This was the only year, during the past 50, when both stocks and bonds had significant declines.

Historically, stocks have the highest and lowest annual performance. Yet, during each 10-year period, long-term stock market returns have been positive.

The 3-month U.S. Treasury bill and cash proxy had positive returns and were the least volatile asset, with the lowest average returns.

Clearly, investing in stocks is the riskiest asset class with the most volatile returns and the potential for the greatest long-term returns. While bonds are less volatile with historically lower average returns.

As 2022 demonstrated, investors might consider adding cash to their portfolio in the form of 3-month Treasury Bills, certificates of deposit or high-yield cash accounts to temper the volatility of stock and bond portfolios.

Use this Empower Retirement Planner to find out if you’re on track for retirement. They do the return projections for you!

Historical Returns for Stocks, Bonds and Cash for 97, 51 and 11 Years

The previous graph shows the 50-year annual return on stocks, corporate bonds and cash.

Next, we’ll explore the average annual returns for bonds, stocks, and cash during various periods.

Historical Stock and Bond Returns for Various Periods | 1928 – 2025

Data source: http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

Key Updates:

• S&P 500 Growth: The strong performance of the S&P 500 in 2025 (17.78%) has pushed the nearly century-long average back above the 10% mark and significantly boosted the 11-year average to 13.41%.
• Bond Yields: Baa Corporate Bonds saw their 11-year average improve to 3.76%, recovering slightly from the low interest rate environment of the previous decade.
• Cash Proxy: The 3-month T-Bill average continues to reflect the higher-rate environment of 2023–2025, with the 11-year average now standing at 1.98%.

Investment returns vary depending upon the time period examined. This chart, and the previous, “50 Year Stock, Bond and Cash Returns” shows the performance for each asset class during the prior 97 years. “Average Historical Return (geometric)” explores the average returns over various periods. You’ll notice that in each period of time, returns were positive for stocks, bonds and cash assets.

Over 51 years, from 1975 through 2025 stocks averaged 12.37% annual returns while Baa Corporate Bonds delivered 8.59% on average, and cash yielded 4.25%.

This golden period included the -22% drop in the Dow Jones Industrial Average (DJIA) Black Monday stock market drop and the -20.4% S&P 500 decline on October 19, 1987. This 51 year stock market period also spans the irrational exuberance in the stock market during the buildup of the dot-com bubble from 1995 through 1999. The last five years of the 1990’s decade saw double digit stock market returns every year.

History reveals that all stock market bubbles reach a breaking point and the early 2,000’s experienced stock market declines during the first three years of the new millennium. 

Examining the prior 11 years, 2015 to 2025, investment market returns were lopsided, due to historically low interest rates. The S&P 500 returned 13%+ on average with Baa Corporate Bonds and cash returning just 3.76% and 1.98% annually.

Historical Stock, Bond and Cash Returns from 2000 – 2025

If you began investing in the stock market in 2000, you would have been hit with three years of negative stock market returns. Stocks had to recover from their overvaluations at the end of the last millennium. But, with a diversified stock and bond portfolio, the stock market losses would have been tempered by the positive bond market returns.

We also saw the 2008 mortgage melt down with a -36% stock market loss. While 2022 attempted to return stocks to a more reasonable valuation, after the runup in valuations and returns from 2019 through 2021. With low inflation and low interest rates during most of this period, decent cash and fixed yields were hard to come by.  

The Bolded returns above, show losing years for stocks and bonds. Notice that the positive return years, far outpace those with negative returns.

What does this mean going forward?

• If you had sold after markets fell, you might have missed the subsequent upswing in stock and bond returns.
• This data recommends that most investors should invest for the long-term in a diversified investment portfolio of stocks, bonds and a bit of cash.
• Don’t place money that you’ll need soon in the stock market, keep those dollars in short-term high yield cash investments.

Can we use historical returns to predict the future?

Reversion to the Mean Drives Future Investment Returns

“Mean reversion is a theory used in finance that suggests that asset prices and historical returns eventually will revert to the long-run mean or average level of the entire dataset.,” ~Investopedia

If mean reversion holds true, then you would expect that future financial asset returns going forward will return to the averages.

1995-1999 Stock Market Returns

During the last four years of the prior millennium, the S&P 500 returns were extraordinary with every year surpassing 22%:

Most stock prices became overvalued and surpassed their intrinsic worth during the late 1990’s. With high returns and stock market overvaluation, the beginning of the new millennium began its journey to “reversion to the mean” and fair value, with losses from 2000 through 2002.

But, just because the stock market might be overvalued today, doesn’t mean that it will return to fair value soon!

Today, when the Price Earnings ratio is compared with its historical average, the S&P 500 stock market is overvalued. This is a valuation metric that considers the amount of money an investor is willing to pay for one dollar of corporate (or index) earnings. Today, the Shiller or CAPE PE ratio (the CAPE price earnings ratio is based on average inflation-adjusted earnings from the previous 10 years) is 40.8, compared with the average CAPE PE ratio of 17.33. Currently, investors are paying more than 100% more than average for one dollar of earnings.

2000-2009 Stock Market Returns

A stellar example of return to the mean is demonstrated during the first ten years of the millennium.

S&P 500 Average Annual Returns – 2000 to 2009

Data source; http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

During the first three years of the decade, the stock market lost -9.10%, -11.89%, and -22.10%. If all of your investments were in the stock market, that would have been a painful three years.

During the first decade of the century, the average annual stock market return was negative -.726%, according to the DQYDJ.com S&P 500 calculator.

After the huge stock market runup in the late 1990s, the early 2000s is an ideal example of mean reversion.

2016 – 2025

After the dismal stock market returns at the beginning of the millennium, the most recent 10-year performance of the S&P 500 is outstanding:

• Stocks rebounded with an average 14.68%% return, inclusive of an 18.0% drop in 2022
• Baa Corporate bonds returned 4.29% during the past 10 years, predominantly due to historically low interest rates.

If you are seeking the answer to the question, ‘How will stock and bond markets perform in the future?’ it’s likely that you’ll find a range of responses from a variety of smart investment professionals. If reversion to the mean plays out, then you might expect a return to lower US stock returns, with bond and cash performance impacted by interest rates.

The volatility of investment markets is a reminder that stock and bond investing is best for money you won’t need for a long time.

Historical Bond Returns by Year

What is the average return if someone invested 100% in bonds?

Depending upon whether you invested 100% in 3-month Treasury bills, 10-year Treasury bonds or or corporate bonds your average returns during various periods were:

Historical Bond Returns for Various Periods | 1928 – 2025

Data source; http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

This Historical Bond Returns bar chart illustrates the average annual geometric returns for three types of fixed-income assets—3-month T-Bills, 10-year T-Bonds, and Baa Corporate Bonds—across three distinct time periods through 2025. Historically, Baa Corporate Bonds have consistently outperformed government securities, averaging a 6.63% return since 1928 and peaking at 8.54% during the 1976–2025 period. In contrast, the most recent decade (2016–2025) reflects a significant downward trend in yields, with 10-year Treasury Bonds returning just 0.89%. These variations highlight how bond performance shifts over time, often influenced by changing interest rate environments and economic cycles.

Bond Returns and Interest Rates

What about bond performance? Can we expect future bond yields to rise?

On January 31, 1986, the Baa corporate bond yield was 11.36%. Yet, as demonstrated by the graph at the beginning of the article, corporate bond yields have trended downward since 1986, with a few periodic reversals.

Bond yields are influenced by market interest rates. When market interest rates are high, bond yields tend to rise (while bond prices decline).

When market interest rates decline (and existing bond prices rise), new bond issues typically offer lower yields.

But yields are only one part of bond total returns, capital appreciation is another.

When interest rates rise, the bond values decline. The annual total return of a bond and a stock is the aggregate of both interest and dividend payments, and capital gains or losses.

Extremely conservative, or older investors seeking capital preservation, might lean towards investment portfolios with greater allocations to bond investments.

What are the Historical Returns of a 60/40 Portfolio?

What were 60/40 portfolio historical returns?

Many portfolio managers, financial planners and investors adhere to a 60/40 investment portfolio. This equates to 60% invested in stocks and 40% invested in bonds.

To calculate a 60/40 portfolio historical return, we’ll use the S&P 500 average returns for the 60% stock portion and the Baa corporate bond average returns for the 40% bond/fixed investment category. The diversification of a stock and bond portfolio will temper the ups and downs of your investments.

Your returns will vary depending upon how many distinct stock asset classes and types of bond assets you select, as well as the specific time period.

60/40 Balanced Portfolio Historical Returns Chart | Stocks vs. Corporate Bonds

Learn: Should I Buy Bonds Now?

Key Performance Insights:

• Long-Term Stability: Over nearly a century, a diversified 60/40 mix delivered a steady 8.66% annual return.
• Recent Outperformance: The 11-year average climbed to 9.55%, largely driven by the 17.78% surge in the S&P 500 during 2025.
• Risk Management: While a pure stock portfolio would have returned more, the 40% bond allocation provided a significant cushion during volatile years like 2022.

Stock and Bond Historical Asset Class Quilt

We’ve been discussing the broad stock market proxy, the S&P 500 and two bond categories, government and corporate. Within these broad categories, there are many types of investments, that have their own characteristics.

The table below, from NovelInvestor.com ranks the best to worst investment returns by asset class over the past 15 years. 

Risk Tolerance and Historical Investment Returns, Why Historical Performance Matters for Your Asset Allocation

Your risk tolerance, or comfort with the ups and downs of your investment portfolio will drive your investment mix.

More conservative investors and those that are approaching retirement will lean towards an investment portfolio with a greater percent of bond and fixed income investments.

Younger and more aggressive investors will own greater percentages of stock investments.

This “Best Asset Allocation Based on Age and Risk Tolerance” Provides a rubrick for choosing your investment mix.

Risk tolerance and asset allocation templates are available online. Rick Ferri’s Core 4 website offers easy to craft investment portfolios.

After you’ve selected a reasonable asset allocation, then examine historical asset class returns to estimate expected future returns.

Be cautious of websites today that suggest future stock market returns will be greater than 9% or 10%. Maybe this will hold for a year or two, but the chances are slim that the stock market returns will match those of the previous decade.

Ultimately, you want to create a diversified investment portfolio, so if one asset class declines, total portfolio losses will be minimized, as other asset classes may remain stable or rise.

Stock and Bond Market Outlook for 2026

The stock market is highly valued, in contrast with historical metrics including the price earnings ratios. Interest rates have recently declined with further reductions expected this year. When stock market values are lofty, at some point they will return to fair value, suggesting that a market correction is in store. Yet, stock market valuations can remain elevated for years, before reversing course.

Vanguard and Grantham investments predict reduced annualized U.S. stock market returns of 3.5% to 5.5% during the next decade. With lower current valuations, international stock market annualized returns are predicted to range from 4.9% to 6.9%.

To protect against a stock market decline, consider adding bonds and high yield cash investments to your portfolio.

Historical Stock and Bond Returns Return Wrap Up | What Can We Learn from Historical Market Performance?

Understanding historical stock and bond returns is the cornerstone of building a resilient investment strategy. While past performance does not guarantee future results, the nearly 100-year history of the S&P 500 and corporate bonds provides a data-driven roadmap for long-term wealth building.

Quick Summary of Historical Averages (1928–2025):

• Equities: The S&P 500 remains the top growth engine, with a geometric annual return of 10.02%.
• Fixed Income: Baa Corporate Bonds provide essential stability, averaging 6.62% annually.
• Balanced Growth: A 60/40 portfolio has historically returned 8.66%, proving that diversification can mitigate risk without completely sacrificing returns.

Your Investing Next Steps:

1. Assess Your Risk Tolerance: Use these historical benchmarks to decide if you can stomach the volatility required for stock market growth.
2. Stay Disciplined: Remember that market downturns are part of the cycle; long-term averages typically reward those who remain invested.
3. Review Your Portfolio: Ensure your current asset allocation aligns with your financial goals and the long-term averages discussed above.

No one can predict future investment returns. But, the educated investor who’s aware of the average bond returns and the average stock returns has a leg up on the less-informed investor. The most successful long-term investors take the time to learn about investment markets history.

FAQ

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Related

• 7 alternatives To Cash – How To Get A Good Returns
• Are Bonds A Good Investment Now?
• Why Asset Allocation Is Important
• Is A 10% Return Good Or Bad?
• The Secret To Flawless Investment Management-For Free

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Active portfolio managers, each have their own ideas about how to get the highest returns for their strategies. Hedge funds, clamor for alpha from creative investment strategies. Finally, the market timers attempt to outsmart the indexes and strive to invest at the bottom and sell at the top.

In most cases, your best lazy portfolio will outperform all the other approaches. If you don’t believe me, then check out Mark Hulbert, William Bernstein, and scores of other well regarded investors and researchers.

Hey, even Warren Buffett, one of the greatest investors of all time, believes in a lazy portfolio.

This article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link.

My Lazy Portfolio Story

For several decades I was an investment portfolio manager. During that time I researched individual stocks and bought and sold them for my company and our family investment portfolio. I read everything available, from Graham, Buffett, Bernstein, Lynch, William O’Neil and more. I subscribed to the American Association of Individual Investors (AAII), Morningstar, the Wall Street Journal and Value Line, all the top research sites of the time. My individual investing strategy was simple, dig into corporate and economic trends, compare valuation, debt, profitability ratios with their historical averages. choose companies trading below or at fair market value, with growth drivers. Buying and selling individual stocks was challenging and profitable.

I was successful and content with my methods and returns.

Once I entered the in the Penn State MBA program, I learned about lazy investing or passive investing studies and research.

On the first day of my investing portfolio management class the professor asked who could beat the market averages. Of course, my hand shot up. After all, most years, my stock picking, beat the S&P 500.

Then, while digging into the investing research, I found out that – over the long term – individual stock pickers rarely beat investing in a portfolio of diversified index funds. And even the stellar portfolio managers, rarely continued to beat the market over the long term. And, today, more so than ever, stock pickers are competing with sophisticated computerized algorithms that are smarter than most individual investors.

My investing methodology was upended.

At that point, I transitioned from a stock picker to a lazy investing approach. Although to this day, I still hold a few individual stocks, the majority of our portfolio is invested in our best lazy portfolio of index funds.

What is a Lazy Portfolio?

A lazy portfolio is a “set and forget” passive investment strategy using low-cost index ETFs and mutual fund allocated by risk tolerance. This approach consistently beats active fund managers because most investors and investment managers fail to outperform major market indexes long-term.

Lazy Portfolio vs Active Investing

Passive investing (lazy portfolios) tracks popular indexes with minimal buying and selling. Active investing involves frequent trading to beat market returns. Vanguard research confirms passive index investing typically outperforms actively-managed funds due to lower fees and consistent market exposure. Even investors who beat the market one year rarely sustain that outperformance.

Lazy Portfolio Research

Vanguard has extensive research that demonstrates the outperformance of a Vanguard lazy portfolio over most actively-managed investment funds.

Studies have shown that even if an investor or actively managed fund beats the market one year, they’re unlikely to repeat that out-performance over the long term.

Best Index Funds for Lazy Portfolios

Lazy portfolio index funds track major indexes. Choose from among the available broad and diversified Low-fee ETFs from these categories:

• S&P 500 – 500 largest U.S. public companies
• Russell 3000 – Tracks 3,000 largest U.S. stocks, representing 98% of the stock market
• Nasdaq 100 – Top 100 Nasdaq companies, technology-focused
• Bloomberg U.S. Aggregate Bond Index – Broad diversified bond market exposure
• FTSE All-World ex-US – Top international index spanning the most important global companies.

For those seeking greater diversification, you’ll additional indexes to copy such as mid- and small-cap US funds, European and Asian global funds or style index funds such as value and growth. There are hundreds of indexes that include portions of the US and global stock and bond markets.

How to Build A Lazy Portfolio

1. Choose low-fee ETFs or index mutual funds matching your risk profile.
2. Allocate between stocks and bonds based on financial goals.
3. Rebalance annually to maintain target allocations and keep costs low.

Analyze your investments with the FREE Empower Investment Check up. Link your investment accounts and get ideas to improve your portfolio.

How Does Portfolio Rebalancing Work?

Portfolio rebalancing maintains your preferred asset allocation percentages. If your target is 70% stocks/30% bonds but market movements shift it to 65% stocks/35% bonds, sell 5% bonds and buy 5% stocks to restore original allocation.

Why Choose a Lazy Portfolio?

• Low management fees maximize investment returns.
• Market-matching performance over time.
• Minimal maintenance required.
• Time-tested wealth-building strategy.

Analyze your investments with the FREE Empower Investment Check up. Link your investment accounts and get ideas to improve your portfolio.

What is the Lazy Portfolio Performance?

One of the most common investing questions about a strategy is, “What is the investment performance?”

That question typically describes the portfolio performance of returns during the past year.

So, if your portfolio was worth $10,000 at the beginning of the year, and at the end, its value was $11,000, your portfolio performance or return was 10.0%.

The best lazy portfolio returns will replicate the returns of the underlying investment funds during the year.

For example, let’s assume that you invested in this three-fund Vanguard lazy portfolio:

The returns of the portfolio replicate the returns of the funds, in the percentages invested. So, the Vanguard Total Stock Market ETF earned 17.10% during one year. Multiply 17.10% by 50%, since that’s the percentage invested in the lazy portfolio. Add up each annual return multiplied by it’s percentages and you’ve got the total return of the portfolio.

Here’s a chart showing the same Lazy ETF portfolio returns over -1, -20 and -30 years.

Three Fund Lazy ETF Portfolio Returns – Annualized One, 20 and 30 Year Performance

Ultimately, your return will approximate that of the returns of the underlying low fee index funds.

There are many different types of lazy portfolios to construct. The underlying similarity is that they all use low fee index funds. But, which indexes you choose to include, will determine your returns.

For those who want low-cost lazy portfolios, created for you, check out the Wealthfront Robo-Advisor. The platform includes low-cost investment management and a top-notch digital financial advisor.

Backtesting and Performance Analysis 

Backtesting means calculating how a specific portfolio might have performed in the past. It’s useful to understand how sectors of the investment markets can vary over time. Although, each asset class will deliver distinct returns during various time periods. The annual returns of U.S. and international stocks and bonds, illustrate how returns vary each year. Notice that stock returns are more volatile than those of bonds.

Backtesting a lazy portfolio will provide insights into the returns and volatility that you might expect in the future.

Stock and Bond Indexes Annual Returns | 2000 – 2025

Data Source: https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

Our three fund lazy portfolio above, shows that last years performance of over 17% is 10% higher than the average performance of that same portfolio during the prior 20 and 30 year periods. Thus, it’s likely that the average portfolio return of 17.21% will continue in the future.

Examining past returns and volatility of asset classes, gives a view of possible performance in the future. Check out years with greatest drawdowns, to make sure you can stomach potential losses in your portfolio value. By backtesting your proposed lazy portfolio, you can avoid common behavioral finance errors such as believing last years performance will continue into the future, or recency bias. Examine standard deviation, which will show the volatility of asset classes as well as years with greatest drawdown in portfolio value.

Analyze your investments with the FREE Empower Investment Check up. Link your investment accounts and get ideas to improve your portfolio.

Best Lazy Portfolio Ideas

For the laziest investors, this is my favorite:

• 60% All World Stock Index Fund or ETF
• 40% US diversifed Bond Index Fund or ETF

This two-fund lazy portfolio invests in one stock fund which covers the entire worlds stock markets and one bond index mutual funds. Depending upon your risk tolerance, you can choose the percent invested in each fund. The more conservative investors will lean towards higher allocations invested in the bond fund, while the more aggressive investors will boost the stock fund amount.

Lazy Portfolios With Vanguard Funds

William Bernstein, former physician turned prolific investing researcher, author and wealth manager recommends this four-fund allocation on the Marketwatch lazy portfolio site:

• 25% Vanguard European Stock Index Fund Investor (VEURX)
• 25% Vanguard Small-Cap Index Fund  (NAESX)
• 25% Vanguard 500 Index Fund (Investor class) (VFINX)
• 25% Vanguard Total Bond Market Index Fund (Investor class) (VBMFX)

This equally divided lazy portfolio limits the bond investments to 25% percent of the entire portfolio with the remaining 75% equally divided among a broad US stock market index fund. The stock portion of the portfolio includes a European equity index fund, and a U.S. small capitalization index fund.

Bernstein’s portfolio is capitalizing on the research that smaller stocks might outperform the total U.S. stock market over the long term. 

Friedberg Family Lazy Portfolio

Although I occasionally tweak our asset allocation, here is the current iteration. I’m not recommending this lazy portfolio to anyone else, simply showing our current asset allocation. For context, my husband and I are reaching the end of our formal working years and will be transitioning to contract and freelance work. Within a few years we’ll also be claiming Social Security.

Others might prefer a target date fund, or an asset allocation with fewer funds. There’s no perfect asset allocation.

Why This Friedberg Family Best Lazy Portfolio Is Good For Us

We’re aproaching retirement and have reached our ‘number’.

We’re more concerned with capital preservation than appreciation. That’s why we have 34% of our investment assets allocated to the fixed category.

The total stock market category allows us to participate in the U.S. market.

The small cap value allocation capitalizes on the Fama and French research that suggests that over the long term, small cap and value stocks outperform the total stock market indexes.

Despite lagging international equity performance recently, I’ve lived long enough to know that popular investment categories shift, sometimes quite slowly. Since the U.S. is only 42% percent of the global equity market, according to Visual Capitalist, it just makes sense to invest internationally.

Real estate is an important category and may be less correlated with the stock markets. I also have a sentimental attachment to real estate due to my long history of working for a real estate holding company and investing in real estate myself.

I’m not suggesting that any of these portfolios are best for you. But only, that if you want an easy way to invest, you might consider creating your own lazy portfolio of ETFs or mutual funds.

Set Up Your Lazy Portfolio – The Easy Way

If you’re just getting started, you might consider creating your lazy portfolio at M1 Finance. The benefit of investing with that firm is that once you set up your portfolio, M1 will rebalance it for you. And that saves a lot of time!

In fact, we have an account with M1 Finance and like the fact that you can invest in nearly 6,000 stocks and ETFs without a management fee. They also offer pre-made portfolios, so you don’t even need to choose your own funds!

M1 Finance Pre-made Investment Portfolios

For lazy investing, you might consider:

• General Investing
• Plan for Retirement
• Just Stocks & Bonds

General Investing Model Portfolio From M1

The general investing pre-made choices are ideal for your lazy portfolio. Just choose your risk tolerance, from ultra conservative to ultra aggressive and you’re done.

Here are the investments included in the moderately aggressive option:

Notice that this is actually a Vanguard Lazy portfolio, premade to fit the moderately aggressive risk tolerance.

For the lazy investor, who is investing for the long term, this type of investment strategy is an easy way to build wealth for tomorrow.

The dividend yield for this investment mix will vary based upon the combined weighted dividend yield of all of the funds. The average expense ratio of the funds is a rock-bottom 0.05%.

The M1 Finance General Investing portfolio (also called “pie”) is available in several risk levels, with the more conservative owning more bond ETFs and the more aggressive choices weighted towards equity or stock ETFs.

Lazy Portfolio Guide Wrap Up

What is the best lazy portfolio?

There is no single “best lazy portfolio” for every investor. The ideal lazy portfolio strategy is the one you design around your personal risk tolerance, long‑term investing goals, and asset allocation preferences. Because future market returns are unpredictable, no investment allocation can guarantee specific results.

Instead, focus on building a diversified lazy portfolio of index funds or ETFs, rebalance your investments annually, and stay consistent with your plan. Over time, this passive investing approach can help you grow wealth while minimizing stress. By learning core investing concepts—such as asset allocation, rebalancing, and long‑term compounding—you’ll be better equipped to stick with your lazy portfolio strategy and enjoy the benefits of simple, low‑maintenance investing

Related

• Lazy Investors Asset Allocation Guide to Amass $787,355
• Which Are The Best M1 Pies For You? Free Lazy Investment Portfolios
• Investing Lazy Portfolios Drill Down
• Best Personal Investment Strategy – For Women (and Men too)
• How to Choose a Mutual Fund
• What Are Index Funds And Asset Classes Investing?
• Best Asset Allocation Based On Age and Risk Tolerance

Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link. That said, I never recommend anything I don’t  believe is valuable.

The post Lazy Portfolio Basics: Easy, Low-Cost Wealth Building  appeared first on Barbara Friedberg.

Jill on Money

• Host: Jill Schlesinger, CFP® and CBS News Business Analyst
• Best For: Everyday investors and families seeking approachable financial guidance.
• Description: Jill on Money is a listener-driven show where Jill answers real-world financial questions with clarity and empathy. She covers topics ranging from retirement planning and investing, to mortgages and career transitions. Jill’s style is conversational and practical, making complex financial concepts easy to grasp. Her background as a CFP® and media analyst adds credibility and depth to every episode.
• Top Episodes:
  • State of the Economy with Diane Swonk
  • Buckets in Retirement
  • Planning Around a Diagnosis

Money Tree Investing Podcast

• Hosts: Kirk Chisholm, Barbara Friedberg, Diana Perkins, Doug Heagren, Phil Weiss and rotating experts.
• Best For: Listeners who want diverse investing strategies and market insights.
• Description: Money Tree Investing Podcast brings together multiple voices to explore different angles of investing. Each episode features an expert guest who shares strategies on stocks, bonds, options, alternative assets or the economy. The panel-style format ensures listeners hear a variety of perspectives, making it a great resource for those who want to broaden their financial toolkit. The show balances practical investing advice and economics, appealing to both novice and seasoned investors.
• Top Episodes:
  • Options Strategies for Modern Investors
  • The Bull Market in Cash Is Coming
  • Secrets to Spending Less on College

This article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link.

The Long View (Morningstar)

• Hosts: Christine Benz, Dan Lefkovitz, Amy C. Arnott
• Best For: Serious investors, financial advisors and professionals.
• Description: The Long View is Morningstar’s flagship podcast, offering in-depth interviews with leading voices in finance. The show emphasizes long-term investing strategies, retirement planning and asset allocation. Episodes often dive into historical market context and forward-looking analysis, helping listeners understand both risks and opportunities. With Morningstar’s research-driven approach, the podcast is a trusted source for thoughtful, data-backed insights.
• Top Episodes:
  • Barry Ritholtz: How Not to Invest
  • Eric Jacobson: The Entire Face of the Bond Market Has Changed
  • Doug & Heather Boneparth: Couples and Financial Harmony

BiggerPockets Real Estate Podcast

• Host: Dave Meyer
• Best For: Real estate investors at all levels, including newbies.
• Description: BiggerPockets Real Estate Podcast is the go-to resource for anyone interested in property investing. The show covers everything from rental strategies and house hacking to multifamily and short-term rentals. Episodes feature successful investors who share their journeys, mistakes, and lessons learned. With practical tips and market insights, BiggerPockets empowers listeners to take actionable steps toward building wealth through real estate.
• Top Episodes:
  • Retired in His Mid-40s Using the Perfect Small Rental Formula
  • Barbara Friedberg “I Don’t Want To Retire”
  • The “Lazy” Person’s Guide to Retiring with Rentals

Financial Independence Podcast (Mad Fientist)

• Host: Brandon (The Mad Fientist)
• Best For: FIRE (Financial Independence, Retire Early) enthusiasts.
• Description: Theis Financial Independence Podcast dives deep into strategies for achieving financial freedom. Brandon interviews pioneers of the FIRE movement, exploring topics like low-cost investing, lifestyle design and early retirement. The show blends practical financial tactics with philosophical discussions about happiness and purpose. Listeners gain both technical know-how and inspiration for living intentionally.
• Top Episodes:
  • JL Collins – The Simple Path to Wealth
  • Mr. Money Mustache – Early Retirement Made Easy
  • Morgan Housel – The Psychology of Money

Link $100k or more in investable assets and talk to a financial advisor about your goals. Receive a free personalized financial plan that’s yours to keep.

Animal Spirits

• Hosts: Michael Batnick & Ben Carlson (Ritholtz Wealth Management)
• Best For: Market watchers who enjoy finance mixed with culture and humor.
• Description: Animal Spirits is a conversational podcast that blends investing insights with everyday life. Michael and Ben discuss markets, investing, personal finance and broader cultural trends in a relatable, entertaining style. The show is less formal than traditional finance podcasts, making it accessible to a wide audience. Listeners appreciate the mix of serious analysis and lighthearted banter.
• Top Episodes:
  • Never Go All in on Stocks (Ep. 437)
  • Talk Your Book: How to Spend with Morgan Housel
  • JP Morgan’s Long-Term Capital Market Assumptions

Your Money, Your Wealth

• Hosts: Joe Anderson, CFP® & Alan “Big Al” Clopine, CPA (Pure Financial Advisors)
• Best For: Individuals planning for retirement, tax-savvy investors and anyone seeking approachable financial guidance presented with humor.
• Description: Your Money, Your Wealth is a long-running personal finance podcast that makes retirement planning and investing fun. Joe and Big Al answer listener questions in a “spitball” style, tackling complex topics like Roth conversions, Social Security strategies, tax reduction and asset allocation. Their dynamic banter and humor lighten the mood while still delivering actionable advice. Recognized by U.S. News & World Report as a top personal finance and retirement podcast, YMYW stands out for blending expertise with entertainment. Each episode is packed with practical tips, free resources, and relatable case studies that help listeners feel confident about their financial futures.
• Top Episodes:
  • Should You Convert to Roth Before or After You Retire? (Ep. 553)
  • Don’t Let Money Anxiety Ruin Your Retirement (Ep. 552)
  • Where Should You Take Retirement Money First If You’ve Saved $2M? (Ep. 551)

Multiple Perspectives

• Host: David Lofgren (EquityMultiple)
• Best For: Investors curious about real estate and alternative assets.
• Description: Multiple Perspectives focuses on commercial real estate and private market investing. The show highlights strategies for fractional ownership, 1031 exchanges, and navigating high-barrier markets. Episodes feature industry experts who share actionable insights and case studies. It’s designed for investors who want to diversify beyond traditional stocks and bonds.
• Top Episodes:
  • The 5-Year Rule: Barbara Friedberg’s Guide to Smart Investing
  • Seattle’s Goldmine: Profiting in High-Barrier Markets
  • The 1031 Exchange Playbook with Dave Foster

Link $100k or more in investable assets and talk to a financial advisor about your goals. Receive a free personalized financial plan that’s yours to keep.

Related

• Is Money The Only Measure Of Success?
• How To Calculate Net Worth And Increase It
• What Is True Wealth? You Are Wealthier Than You Think
• Should I Pay Off My Mortgage Or Invest In The Stock Market?
• Is Now a Good Time to Borrow Money?
• 10 Secrets To Becoming A Millionaire – At Any Age

Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link. That said, I never recommend anything I don’t  believe is valuable.

Disclosures:

• I’m a regular panelist on the Money Tree Investing Podcast and have been a guest on the Bigger Pockets Real Estate and Multiple Perspectives shows.
• This article was formatted with copilot ai.

The post 8 Best Money And Investing Podcasts appeared first on Barbara Friedberg.

With recent high inflation, investors are wondering if gold is a good investment. This article answers questions related to investing in physical gold, gold coins, gold ETFs and gold mining companies. You’ll learn whether gold is a good inflation hedge, if gold coins are a good investment, which is better physical gold or stocks, and finally the pros and cons of investing in physical gold. You’ll also find out ways to invest in gold.

This article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link.

Quick Summary

Bottom Line: Gold serves as portfolio insurance and a diversification tool but significantly underperforms stocks over long periods. Best suited for conservative investors seeking stability rather than growth.

50-Year Gold vs. Stock Market Return Stats:

• S&P 500 annual return Nov. 1975-Nov. 2025: 11.93% (dividends reinvested)
• Gold annual return since Nov. 1975-Nov. 2025: 6.93%

Data source: dqydj.com

Best For: Investors who want to diversify beyond stocks and bonds, those concerned about currency devaluation, or anyone seeking a “store of value” asset.

What is Gold Investing?

Gold has been considered a valuable commodity for thousands of years and continues its allure today. Investing in gold is simply buying and selling gold. You could buy physical gold bars with an app, or purchase gold through exchange traded funds (ETFs) or stocks in gold mining companies.

Unlike stocks or bonds, gold doesn’t generate income through dividends or interest. Instead, its value comes from universal agreement that gold is valuable—a characteristic that makes it a “store of value” asset. This consensus among individuals, institutions, and governments, along with its limited supply, is why gold can appreciate despite offering no yield.

Opinions abound concerning whether to invest in gold, or not.  Similar to other financial assets, the price of gold goes up and down.

The End of the Gold Standard

Gold’s importance changed in the U.S. in 1971, when President Nixon ceased the convertibility of gold into U.S. dollars, effectively terminating the gold standard. The decoupling of the dollar with gold, removed gold’s inherent mechanism to control inflation.

Following the halting of gold standard, gold prices soared during the 1970’s and 80’s and then traded flat for the next 20 years. While gold hasn’t been a perfect inflation hedge and delivers lower returns than equities, its diversification benefits support including a small gold allocation in a balanced portfolio.

Pros and Cons of Investing in Gold

Advantages of Gold Investing

• Diversification Benefits Gold typically has a low correlation with stocks and bonds, meaning it often moves independently of traditional assets. This can reduce overall portfolio volatility.
• Store of Value Gold maintains purchasing power over extremely long time horizons and is universally recognized as valuable across all cultures and economic systems.
• Historical Trustworthiness With thousands of years as a valued commodity, gold has demonstrated remarkable staying power and is likely to remain valuable far into the future.
• Crisis Hedge During periods of economic uncertainty, geopolitical instability, or currency devaluation, gold often performs well as investors seek safe-haven assets.

Disadvantages of Gold Investing

• No Income Generation Unlike stocks (dividends) or bonds (interest), gold produces zero cash flow. You profit only if the price appreciates.
• Storage and Insurance Costs Physical gold requires secure storage and insurance, adding ongoing expenses that erode returns over time.
• Underperformance vs. Stocks Historical data shows gold trails stock market returns over long periods.
• High Volatility Without Commensurate Returns Gold experiences stock-like volatility but delivers bond-like returns, creating an unfavorable risk-reward profile.
• Unfavorable Tax Treatment Net capital gains from selling collectibles (such as gold) are taxed at a maximum 28% rate, higher than the capital gains rate on stocks and bonds.¹

How to Invest in Gold?

Gold investing has been around for centuries. Today, there are a preponderance of methods for investing in gold. You could buy the actual metal in the form of bars or coins, buy stock in gold-mining companies or invest via other market derivatives like gold futures.

1. Physical Gold (Coins and Bars)

You can buy physical gold through a gold app like Vaulted. They will store the gold for you for low fees, or you can take possession of the physical gold. You’ll also find many dealers, individuals or online platforms that sell gold.

Gold coins are available at the US Mint or a dealer.

2. Gold ETFs and Mutual Funds

You can buy a gold ETF or mutual fund. The SPDR Gold Shares (GLD) ETF is a low-cost efficient way to access the gold market. Other gold funds include Invesco DB Gold Fund (DGL) and the Franklin Gold and Precious Metals Fund (FKRCX). The Sprott Physical Gold Trust (PHYS) is a closed end gold fund where unitholders have the ability to redeem their units for physical gold. The Fidelity Select Gold Portfolio (FSAGX) mutual fund spans precious metals and mining activities.

3. Gold Mining Stocks

An alternative to physical bold is to buy a publicly traded gold mining company stock or fund. You can buy an ETF like VanEck Gold Miners ETF (GDX) which strives to match the price and yield of the NYSE Arca Gold Miners Index (GDMNTR).

Individual gold mining stocks include Barrick Gold (GOLD) and Equinox Gold Corp. (EQX).

4. Gold Futures and Options

Contracts to buy or sell gold at predetermined future prices are best suited for sophisticated investors. It’s best to learn more about futures trading before embarking on this method of buying gold. 

Are Gold Coins a Good Investment? Coins vs. Bars

If you’re torn between investing in gold coins or bars, check out this comparison.

Purity and Authenticity

• Gold Coins: Typically minted in 22-karat (91.67%) or 24-karat (99.9%) purity. Examples include American Gold Eagle (22k) and American Gold Buffalo (24k). Coins are produced by sovereign mints, offering guaranteed authenticity backed by government certification.
• Gold Bars: Almost always 24-karat and close to 100% pure. While bars can carry certifications, they lack the inherent government-backed authenticity of coins, making verification more critical when purchasing.

Storage and Security

• Coins: Standard sizes make storage straightforward, but their condition significantly impacts value. Investors must protect coins from damage, adding complexity to storage.
• Bars: Easier to store and less sensitive to minor blemishes. However, large bars can pose challenges due to uneven sizing and concentration of value in a single piece.

Liquidity

• Coins: Highly liquid due to government certification, recognizable designs, and added numismatic appeal. Easier to resell, though they often carry higher upfront costs.
• Bars: Less liquid because buyers require weight verification and authenticity checks. Typically held long-term for their melt value rather than traded frequently. Although the Vaulted App provides liquidity for gold bar investors.

Premiums

• Coins: Higher premiums over spot price due to rarity, condition, and popularity. Dealers charge extra for their ease of resale and collectible value.
• Bars: Lower premiums since value is tied solely to gold content. They are generally more affordable and reflect spot prices closely, making them cost-effective for bulk stacking.

Investment Strategy

• Choose Coins if you prioritize liquidity, frequent trading, or enjoy collecting pieces with historical or aesthetic value.
• Choose Bars if your goal is to accumulate maximum gold weight at the lowest cost and you’re comfortable with long-term storage (unless using an app).

Neither option is universally better; the choice depends on your investment objectives. Coins offer authenticity and liquidity, while bars provide cost efficiency and simplicity. For diversification, consider a mix of both. If you lack the money to buy a complete bar of gold, you can buy fractional shares of gold bars with an app.

Gold Prices vs Inflation Prices – 1970 to 2025

Sources: Gold Prices – Macrotrends, Inflation Rates – US Inflation Calculator

Is Gold a Good Inflation Hedge?  

With inflation a frequent concern, investors are turning to gold investing. Gold is often considered to be a hedge against inflation. The chart above tracks the nominal price of gold (gold line) per ounce in U.S. dollars, and the red line tracks the annual percentage change in the consumer price index (CPI),

The data shows these insights comparing gold prices vs inflation rates:

• 1970s Surge: Both inflation and gold prices spiked during the 1970s oil crisis and stagflation era.
• 1980 Peak: Gold hit a high in 1980, mirroring peak inflation.
• 1990’s: Inflation peaked in 1990, with no commensurate increase in gold prices. Throughout the decade. gold remained stable while inflation was more volatile. The 1990’s showed a low correlation between gold prices and inflation.
• 2000s–2020s: Gold prices rose sharply post-2008 and again during the COVID-19 era, while inflation remained relatively low until 2021–2022. In 2010, inflation sank and gold prices rose. another inverse correlation.
• 2022–2025: Inflation peaked again in 2022 (~8%) and began to normalize, while gold prices continued climbing, reaching over $3,000/oz in 2025.

Gold prices appreciated during certain periods with little or no correlation with increased inflation. There is little data to suggest that inflation consistently drives gold prices. in fact, during some periods there is an inverse relationship between gold and inflation with low inflation and rising gold prices. Geopolitical and other factors might contribute to rising gold prices, regardless of inflation levels.

A weak correlation doesn’t imply no correlation between gold prices and inflation. Yet, there may be better inflation hedges than gold. A study by Bloomberg, World Gold Council from 1998 to December 2020, found that real estate and the 10-year TIPs were more consistent hedges against inflation with gold clocking in at third place. 

Gold vs Stock Market Returns – 50 Year

11/1975 to 11/2025

**** pardon our dust – we’re updating this article ************

Should I Buy Physical Gold or Stocks?

Physical gold should be seen as a safety net – a preservation of value – more so than an outright investment. Most stocks, in contrast, are investments. When comparing growth of the S&P 500 with that of gold prices, the stock market prevails during most historical periods.

Gold vs Stock Investing Comparison

The S&P 500 returned 11.93% annually during the last 50 years (as of November 2025), with dividends reinvested. In contrast, gold delivered 6.93% annualized returns during that same time.

As for buying physical gold or gold stocks, keep in mind that physical gold often sells at a premium. That might make gold stocks a cheaper option. In addition, buying and selling gold stocks or funds is an easier and faster process than is buying and storing physical gold.

If your time horizon is short – i.e., you want to invest in gold for under a decade – you are likely to find funds or even future contracts more convenient than beginning a gold coin/bar collection. In the end, though, no one says you cannot do both. You can hold physical gold for worst-case scenarios, own a gold ETF in your portfolio for diversification, and buy gold stocks for investment.

For long term investors, seeking capital appreciation, the stock market has delivered greater returns than gold investing.  

Does Gold Lose Value?

Gold’s value is influenced by supply, demand and investor sentiment. Gold is a shiny valuable metal and has been considered important for a long time. Likely, gold will only lose value if investors lose faith in the metal, a phenomenon that is unlikely to occur anytime soon.

Gold’s limited supply adds a price floor and enables price growth when demand grows.

If you were to value gold objectively, such as via its use in electrical and jewelry manufacturing, the metal is highly overpriced. This keeps value investors, such as Warren Buffett, away from gold. But this does not mean gold is losing value over time.

Rather, gold’s benefit lies in its so-called “store of value.” It is not only a faith-based commodity with a long track record, but it is rare. It cannot be artificially manufactured, and it does not decay over time. If you buy a gold coin now, you will have the same amount of gold relative to the total amount of gold in circulation decades from today, as there is a finite supply of gold. 

That said, the price of gold can go up and down, and there have been long periods of time, like 1980 to 2000 and 2010 to 2020, when gold’s price has remained flat.

Is There a Downside to Investing in Gold?

Gold has a real expected return of zero with no cash flow. Over a long enough time horizon, gold holds its value against inflation, meaning that – on average – the performance of gold relative to nearly any asset, whether it be one with yield or equities, is poor. Gold is often bought as a hedge against inflation, despite the reality that the price of gold is inconsistently impacted by inflation.

Moreover, gold comes with extra expenses. Physical gold sells at a premium and often requires storage costs. Gold is also taxed as a collectable, which is the same as your marginal income tax rate and capped at 28%.

Lastly, gold is volatile. Investors should be rewarded for holding risky, volatile assets, as is the case for stock investing. However, gold doesn’t reward investors for its commensurate risk and the risk/reward profile for investing in gold is poor in contrast with investing in stocks.

That said, adding a small gold allocation to an all stock and bond portfolio might temper the portfolio’s volatility of returns.

Gold vs Cryptocurrency Investing – Which is Better? 

Digital currency, spearheaded by the founding of Bitcoin in 2009 is emerging not only as a currency, but also as an investment. The future of cryptocurrency investing is less certain than gold, which has been around for thousands of years. As businesses, and even governments begin to accept digital currency, investors gain confidence in the future of crypto investing. 

Whether gold or cryptocurrency investing is better depends upon your investment objectives and risk tolerance.

In 2009, one bitcoin was worth $0.09.

Bitcoin reached a peak of $114,472 on October 26, 2025 and on November 21, 2025 one bitcoin was priced at $84,848.

Gold closed out 2009 at a price of $1104, and is trading in November 2025 at $4096. Clearly, bitcoin had a better run than bitcoin cryptocurrency since 2009.

For investors, with a high risk tolerance, seeking potential returns that surpass the S&P 500, crypto might be a better alternative. If you want a secure store of value, with a long history, then consider gold investing. 

How Much Gold Should You Own?

When investing in speculative and alternative assets, we typically recommend a 5% to 10% allocation. That way, if gold prices stagnate for long periods of time you’ll have ballast during a down market, and minimal impact when stocks and bonds are rising.

Final Verdict: Should You Invest in Gold?

Physical gold is a highly concentrated store of wealth. The benefit of gold investing comes from it’s long history as a valuable commodity. Gold also has validity as a portfolio diversifier. Small allocations to gold can smooth out the volatility of a diversified portfolio.

But, gold comes with its own problems, including storage risks (getting lost or stolen), counterfeiting (usually via tungsten) and extra costs (certification, taxes, and premium prices). You can alleviate many of these problems via an online vendor such as Vault. Gold isn’t the best asset fo capital growth and tends to underperform over time

Ultimately, gold is a reasonable alternative for diversifying your portfolio and adding a small ballast against inflation. Think of gold as portfolio insurance, not a growth investment. Just as you maintain home insurance hoping you’ll never need it, hold gold as a safety net while building real wealth through stocks, real estate, and other productive assets.

Before investing in gold, ensure you’ve:

1. Understood your investment objectives and risk tolerance
2. Maximized tax-advantaged retirement accounts
3. Built an adequate emergency fund
4. Invested appropriately in stocks for your time horizon

Gold has its place in your investment portfolio—just make sure that place is limited and strategic.

Related

• Vaulted Review-Best Gold Investing App
• Should I Invest In Dividend Stocks?
• Pros And Cons Of Target Date Funds
• How To Benefit From Cyclical Investment Markets
• What Are TIPS Inflation Protected Bonds?
• Are I Bonds A Good Investment?
• M1 vs Wealthfront: Which Is Best?

Sources:

• https://www.gold.org/goldhub/research/beyond-cpi-gold-as-a-strategic-inflation-hedge
• https://www.reuters.com/article/sponsored/beyond-cpi-gold-as-a-strategic-inflation-hedge
• https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2078535
• https://www.nber.org/papers/w18706
• https://www.jmbullion.com/investing-guide/bullion/gold-bars-vs-gold-coins/
• Gold Prices – Macrotrends
• Inflation Rates – US Inflation Calculator
• https://dqydj.com/gold-return-calculator/
• https://www.irs.gov/taxtopics/tc409

Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link. That said, I never recommend anything I don’t  believe is valuable.

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