Perhaps you are among those who have kept money in savings accounts because you thought they were the safest way to protect it.

However, you have realized that the paltry interest these accounts pay cannot even keep pace with inflation. Now, you want to invest your money where you can get good returns that beat inflation and help you build wealth for the future.

Though higher returns typically mean higher risk, there are many investment assets where you can get good returns without taking on too much risk （based on your risk tolerance and capacity）。

Here are some of the asset classes that can help you do this:

Stocks.

Real estate investment trusts （REITs）。

Commodities.

Bonds.

Index funds and ETFs.

Mutual funds.

Investing in a diversified portfolio.

 

Stocks

Stocks are arguably the greatest wealth-creating assets of all time. They represent ownership in public companies. By owning the shares of a public company, you can earn a portion of its income （through dividend payouts） and participate in its growth trajectory through price appreciation.

In the U.S., the health of the stock market is measured by the S&P 500’s performance （an index of 500 leading U.S. companies weighted by market capitalization）。

Since 1928, this index has produced an average annual return of 10.16%, according to Official Data, a financial and economic data website. Even after adjusting for inflation, the index still has an average return of 6.91%.

This implies that even if all you do is invest in 500 of the largest U.S. companies, with an allocation formula based on their market cap, you can earn an average of nearly 7% in annual returns after discounting for inflation.

With such returns, why settle for savings accounts?

Real Estate Investment Trusts （REITs）

Real estate investment trusts are stocks of real estate and mortgage companies.

Though they are also stocks, they are treated as a different asset class since they are an alternative way to invest in real estate. Instead of purchasing, managing and selling physical real estate, you can profit from the activities of companies in the sector.

Interestingly, stocks and REITs are always competing in terms of returns. We can see this by comparing the S&P 500 to the FTSE Nareit All REITs, an index of both equity and mortgage REITs.

Over the past 20 years, the S&P 500 had an annualized return of 11%, while the FTSE Nareit All REITs had an average annual return of 11.04%.

If we narrow it down to the past 10 years, the former had an annualized return of 14.6%, while the latter had an average annual return of 6.5%.

Interestingly, if we extend it to 30 years, the S&P 500 had an annualized return of 10.32% while the FTSE Nareit All REITs had an average return of 10.79%.

At least, we can say that REITs can also help you earn positive returns that can keep up with inflation.

Commodities

Commodities like gold and silver can also produce positive returns.

Over the past 40 years, gold and silver produced unadjusted average annual returns of 6.9% and 7.3%, respectively, which is lower than what stocks and REITs produce.

However, they have produced an average of 11.5% and 12.4% over the past 20 years, respectively, and 16.2% and 22% over the past 10 years.

In other words, in recent years, commodities like gold and silver have produced returns comparable to stocks and REITs. Also, gold and silver are known for their safe-haven status, as their prices tend to go up when traditional equity markets are declining.

Regarding inflation, we cannot ignore crude oil. Crude oil prices tend to rise with inflation, which makes them an effective hedge against inflation.

Over the past decades and centuries, crude oil has generated the highest inflation-adjusted returns when inflation is on the rise. A 1% increase in inflation results in the largest increase in real returns in energy, compared to other commodities, according to Goldman Sachs.

Bonds

Bonds are long-term fixed-income securities that corporations, national governments, local governments and government agencies use to raise money from the investing public. Since they are fixed-income securities, they don’t provide as high a return as the other asset classes we have considered.

Between 1928 and 2025, the 10-year U.S. Treasury bond had an average annual return of 4.82%, while Baa （moderate risk） corporate bonds produced an average of 6.9%.

This increased to 6.6% for Treasury bonds and 8.86% for corporate bonds between 1976 and 2025, and reduced to 1.22% for Treasury bonds and 4.66% for corporate bonds between 2016 and 2025.

Yet, except for Treasury bonds between 2016 and 2025 （where real return was -1.8%）， all these returns were higher than the inflation rate, which means real return was positive. In other words, though their returns are lower than those of other assets, they still beat the inflation rate most of the time.

Also, investors desire bonds for their low risk. This is especially true for U.S. Treasury bonds that are backed by the financial power of the federal government and are thus considered risk-free. Furthermore, bonds can be used to generate regular income from your investment portfolio, which usually comes in handy during retirement.

Index Funds and ETFs

When talking about the performance of stocks, we focused on the S&P 500 as a measure of the health of the stock market.

The same thing applies to REITs and bonds: The returns we have considered are based on indexes rather than individual assets.

Many investors purchase individual stocks, REITs and bonds rather than the indexes. Those who do this can generate returns that are higher or lower than the indexes, depending on their skills.

However, after adjusting for commissions and other fees associated with the regular purchase and sale of these assets, those who produce higher gross returns than the indexes may not produce higher net returns. More importantly, while anyone can outperform a relevant index in any given year, they might not do it consistently over the long term.

As a beginner who doesn’t have the skills or time to try to outperform indexes consistently, you might be better off following a passive strategy that tracks the performance of these indexes.

In other words, you might consider buying index funds （passively managed mutual funds） or exchange-traded funds that track the S&P 500, among other indexes （Nasdaq-100 and Russell 2000 are some other examples）。 The major difference between the two is that you can only trade the former at the end of the trading day, while you can buy and sell the latter during normal trading hours.

An index fund or ETF invests in all the constituents of the index it tracks. So, an S&P 500 ETF invests in all 500 companies in the index. This helps you benefit from diversification, avoiding exposure to the risk factors of a few stocks, bonds or REITs.

If you don’t want to bother about the storage and safekeeping of physical commodities, you can also purchase them as ETFs （or exchange-traded commodities）。 In this way, you get exposure to their price movements without taking delivery of them.

Mutual Funds

If you are still concerned about generating higher returns than market indexes but don’t trust your ability to do it, you can buy mutual funds instead. These are investment funds managed by finance experts. Unlike index funds and ETFs, many mutual funds are actively managed, with the fund manager making frequent portfolio decisions to achieve higher returns than the market.

However, various research studies have shown that most fund managers （especially managers of large-cap mutual funds） struggle to outperform their benchmark indexes, especially after deducting management fees.

For example, in 2025, 79% of large-cap mutual funds underperformed the S&P 500, the fourth-worst year for active large-cap managers over the 25-year history of SPIVA Scorecards, according to S&P Global. Remember that even when one outperforms a given index, it remains to be seen if it can do that consistently. Expert fund managers face the same issue.

Investing in a Diversified Portfolio

Warren Buffett said the No. 1 rule when investing is to avoid losing your money. And the second rule is not to forget the first.

As a beginner investor, a good way to adopt this sage-but-simple advice is to invest in a diversified portfolio. Diversification helps to reduce your risk exposure by ensuring that you don’t have all your eggs in one basket.

If you prefer to invest in individual assets, be sure to purchase multiple stocks across different industries, market caps and regions. Then add Treasurys and corporate bonds to your portfolio to further reduce its risk. You should also consider adding REITs to diversify into real estate and commodities to make your portfolio more resilient when economic uncertainty and market downturns hit.

If you prefer index funds and ETFs, be sure to diversify across the various asset classes we have mentioned instead of buying only an S&P 500 ETF, for example.

Also, if you prefer the mutual funds route, ensure you don’t invest only in equity mutual funds. Explore mutual funds of other asset classes to reduce your risk exposure.

A better approach is to talk to your financial advisor, who will be in a better position to help you design an investment portfolio that will get you good returns while considering your risk tolerance, risk capacity, time horizon and investment goals.