The year 2025 brought positive returns across all major asset classes that I monitor. According to Morningstar, here are the total annual returns, which include both price appreciation and dividends/interest, for select asset classes as measured by popular ETFs as of the market close on December 31, 2025.
I have not included Bitcoin or other cryptocurrencies in my analysis because I do not consider them long-term investments; I only hold small amounts temporarily and would not recommend them to my family. Nonetheless, it’s worth noting that Bitcoin experienced a slight decline this year.
On the other hand, Gold saw substantial gains this year, suggesting that it possesses very different attributes compared to Bitcoin. Notably, very few developed countries are accumulating large reserves of Bitcoin in their central bank vaults.
The “set it and forget it” Vanguard Target Retirement 2055 fund (VFFVX), which comprises approximately 90% diversified stocks and 10% bonds, experienced a 21.4% increase in 2025.
Commentary: The year 2024 once again emphasizes the importance of remaining invested. There will always be reasons for concern, such as the historically high valuations of US stocks or fears of an AI bubble that could threaten jobs.
Here are the cumulative returns through the end of 2025 for those who consistently invested in the Vanguard Target Retirement 2055 fund over the years, despite the numerous challenges the world faced:
(These funds work exceptionally well within 401(k)s and IRAs. I would recommend avoiding Target Retirement mutual funds in taxable accounts.)
I feel it is crucial to emphasize the benefits of steady compounding over the chaotic short-term trends surrounding us. Whether it’s sports betting, risky options trading, or cryptocurrency speculation, I advise my children that it is perfectly acceptable to steer clear of certain trends. You don’t need to experience something firsthand to recognize it as a poor choice.
