The reason these findings are so remarkable is that they fly in the face of economic theories of asset valuation, which suggest risky assets like stocks should have higher returns than stable ones like housing. By standard measures of uncertainty, housing was about half as risky as equities, and slightly less risky than bonds. At the same time, the risk associated with housing was far lower. They find that, in the average wealthy country, the annual return on housing during that period was just over 7% when adjusted for inflation, while the return on equities was just under 7%. In a feat of extraordinary data collection, the researchers pulled together the annual returns of treasury bills, treasury bonds, equities, and residential housing from 1870 to 2015 for 16 now-rich countries such as the US, Germany, and Japan. This is the argument of a groundbreaking new paper from economists at University of California-Davis, University of Bonn, and the Deutsche Bundesbank (the central bank of Germany). In rich countries, over the very long term, housing investments get you returns similar to equities (like stocks and other securities), while providing the low volatility of bonds.

Treasury bonds will keep you safe, but they won’t make you rich. Stocks will bring you highs, but periodically will seriously let you down.

হায়রোগ্লিফের দেশে by Anirban Ghosh