Average ROI by Investment Type: 2026 Benchmarks and Comparison

Why ROI Varies by Investment Type

Return on investment is not one-size-fits-all. The returns you can expect depend on the asset class you choose, and those differences are not random. They reflect a fundamental principle in finance: the risk-return tradeoff.

Investments that offer the potential for higher returns expose you to greater uncertainty. A savings account at an FDIC-insured bank carries virtually no risk of loss, so it pays a modest return. Stocks, on the other hand, can lose 30% or more in a single year, so they compensate investors with higher average long-term returns.

Understanding typical ROI ranges for each asset class helps you:

• Set realistic expectations for your portfolio's growth
• Evaluate your performance against the right benchmark
• Build a diversified portfolio that matches your risk tolerance and time horizon
• Avoid chasing unrealistic returns that often lead to excessive risk-taking

The benchmarks below represent historical averages and typical ranges as of 2026. Past performance does not guarantee future results, but these ranges provide a useful framework for planning.

Average ROI by Investment Type: 2026 Benchmarks

The following table summarizes typical annual ROI ranges across major investment categories, ordered from lowest to highest risk. All figures represent nominal (before-inflation) returns based on long-term historical data unless otherwise noted.

Based on long-term historical averages. Current-year rates for savings and CDs reflect early 2026 market conditions. Past performance does not guarantee future results.

S&P 500 / Stock Market (~10% Average)

The S&P 500 -- an index of 500 large US companies -- has delivered an average annual return of approximately 10.3% since 1926, according to historical market data. After adjusting for inflation, the real return is roughly 7% per year.

This benchmark is widely used because low-cost index funds allow any investor to match the market's return. However, individual years vary dramatically: the S&P 500 has posted annual gains above 30% and losses exceeding 30% in different years.

Real Estate (8-12%)

Real estate returns come from two sources: rental income (typically 4-6% net yield) and property appreciation (historically 3-5% per year nationally). Combined, total returns generally fall in the 8-12% range, though results vary significantly by market, property type, and management quality.

Real estate offers unique advantages including leverage (you can finance 80% of the purchase), tax benefits (depreciation, mortgage interest deduction), and inflation hedging (rents tend to rise with inflation). The downsides include illiquidity, management responsibilities, and concentrated risk in a single property.

For a deeper look at how leverage amplifies your investment returns, use our Investment Calculator to model different growth scenarios.

Bonds (4-6%)

Government bonds (US Treasuries) typically yield 4-6% nominally, with virtually no default risk for federal bonds. Corporate bonds from investment-grade companies offer slightly higher yields of 5-7% to compensate for the small risk of default.

Bonds serve a critical role in a diversified portfolio: they provide steady income and tend to hold their value -- or even rise -- when stocks decline. For retirees and conservative investors, bonds provide more predictable returns than equities.

High-Yield Savings and CDs (4-5%)

High-yield savings accounts and certificates of deposit (CDs) currently offer 4-5% APY in early 2026. These are the safest investments available because they are FDIC-insured up to $250,000 per depositor per institution.

The tradeoff is clear: your principal is guaranteed, but returns barely keep pace with inflation. These vehicles are ideal for your emergency fund and short-term savings (money you need within 1-2 years), not for long-term wealth building.

REITs (8-12%)

Real Estate Investment Trusts (REITs) allow you to invest in real estate without owning physical property. Publicly traded REITs have historically returned 8-12% annually, combining dividend income (REITs must distribute at least 90% of taxable income) with share price appreciation.

REITs offer better liquidity than direct real estate ownership -- you can buy and sell shares on stock exchanges just like any other stock. However, they tend to be more volatile than direct property ownership because their prices fluctuate with the broader stock market.

Cryptocurrency (Highly Variable)

Cryptocurrency returns defy easy benchmarking. Bitcoin, the largest cryptocurrency by market capitalization, has delivered extraordinary returns in some years and devastating losses in others. Annual swings of 50-100% in either direction are common.

Small Business (15-30%, but High Failure Rate)

Successful small businesses can generate annual returns of 15-30% or more on invested capital. However, this headline figure masks significant survivorship bias. According to the Bureau of Labor Statistics, approximately 20% of new businesses fail within the first year and about 50% fail within five years.

Small business investment also demands significant time, expertise, and active management -- it is not a passive investment. The high potential returns reflect the substantial risk and labor involved.

Understanding Risk vs. Return

The relationship between risk and return is the most important concept in investing. Every investment involves a tradeoff: to earn higher returns, you must accept greater uncertainty about the outcome.

The Risk-Return Spectrum

Think of investments on a spectrum from safest (lowest return) to riskiest (highest potential return):

Risk-Adjusted Returns: The Sharpe Ratio

Comparing raw ROI numbers across different asset classes can be misleading. A 12% return from a volatile tech fund is not necessarily "better" than an 8% return from a diversified bond portfolio -- you need to account for the risk taken to achieve that return.

The Sharpe ratio is a widely used metric that measures return per unit of risk:

For individual investors, the practical takeaway is this: do not chase the highest ROI without considering the risk. A well-diversified portfolio that matches your risk tolerance will typically outperform a concentrated, high-risk bet over the long term.

Nominal vs. Real ROI: Why Inflation Matters

All of the benchmark returns discussed above are nominal returns -- they do not account for inflation. To understand your actual wealth growth, you need to calculate real returns by subtracting the inflation rate.

Approximate real returns using 3% inflation (close to the long-term US historical average of 3.3%). Actual inflation varies year to year.

Notice that a high-yield savings account earning 4.5% with 3% inflation delivers only about 1.5% in real purchasing power growth. Over 20 years, that is the difference between your money nearly doubling (at 7% real) versus growing by only 35% (at 1.5% real).

Use our Inflation Impact Guide to see how inflation erodes your savings over specific time periods, and our Compound Interest Calculator to model how different real return rates compound over time.

How to Calculate Your ROI

Whether you are evaluating a stock portfolio, rental property, or any other investment, the basic ROI formula is the same:

For investments held over multiple years, use the annualized ROI (also called CAGR) to fairly compare investments with different holding periods:

Example: Comparing Two Investments

Suppose you are comparing a stock investment to a rental property:

• Stocks: $10,000 invested, now worth $25,937 after 10 years
• Rental property: $50,000 invested, now worth $107,946 after 8 years

While the stock investment has a higher total ROI (159% vs. 116%), the annualized returns are nearly identical at about 10%. The rental property generated a larger dollar profit ($57,946 vs. $15,937) because of the larger initial investment. This is why annualized ROI is essential for fair comparisons.

Rather than calculating these numbers by hand, enter your actual investment figures into our ROI Calculator to see your results instantly.

Frequently Asked Questions