T
o build a successful investment portfolio, it's essential to diversify your assets across various classes, including stocks, bonds, mutual funds, savings accounts, real estate, and more. However, if you had to choose between individual asset classes like stocks or real estate, legendary investor Warren Buffett would opt for stocks. In a recent Berkshire Hathaway shareholder meeting, Buffett explained that he prefers the stock market due to its vast opportunities in the United States.

    Buffett's preference might surprise real estate investors who have seen significant gains in home values over the past decade. However, when considering long-term returns, the stock market has outperformed real estate. Over the past 30 years, the S&P 500 index has returned an astonishing 1,008%, while the Dow Jones Industrial Average has gained 847%. Even residential and commercial real estate have struggled to keep pace with these numbers.

    Here's a comparison of returns for various indexes over the past three decades:

    * Residential real estate values in the United States (tracked by the Federal Reserve Bank of St. Louis) rose from 80.084 in March 1995 to 327.679 in March 2025, resulting in a 309% return.

    * The S&P 500 index grew from 533.40 in May 1995 to 5,911.69 in May 2025, yielding a 1,008% return.

    * The Dow Jones Industrial Average increased from 4,465.14 in May 1995 to 42,270.07 in May 2025, resulting in an 847% return.

    * The tech-heavy Nasdaq index skyrocketed from its value in the 1990s, fueled by advancements in technology and innovation, with a 30-year return of over 100%.