Neerav Kaiser picks stocks over gold and Bitcoin for the next five years

Where to invest money for the next five years is a question facing everyone from the ordinary investor to the wealthy. Gold, Bitcoin, government bonds, real estate or the stock market directly: everyone looks for an answer, and market experts keep offering different advice based on their own experience.

Markets columnist and Unison Advisors founder Neer Kaiser explored the question in a special analysis by staging a kind of tournament between asset classes. At the end of the contest he named the stock market the best option.

He began by comparing old and new-age assets. In the first round, bonds faced gold. According to Kaiser, the bond option is very boring, while gold has more allure, so he chose gold over bonds.

Cash and Bitcoin came next. The decision was somewhat hard for Kaiser, but he has no particular interest in holding idle cash. He therefore set cash aside and advanced the cryptocurrency Bitcoin. In doing so, however, he did not state any specific future return target or price estimate for Bitcoin.

In the next round, stocks faced private equity, and Kaiser chose the stock market. On private equity, he raised the issue of transparency. In his view, investors do not easily get clear information about what is actually happening in such investments, how the money is being used and what the financial health of the companies is. He also doubted how reliable the return figures quoted for private equity are. According to him, details of companies' financial information, operations and transactions are comparatively easy to obtain in the stock market. But that does not mean every stock market investment is safe or profitable.

When gold and Bitcoin met head to head, Kaiser chose gold. Both can be regarded as a means of preserving value. Still, he pointed to a distinct strength of gold: it can be held in the hand, whereas Bitcoin is a purely digital currency. Gold's tradition is many years old, and investors in different countries regard it as a valuable asset. Bitcoin's price rests mainly on market demand, supply and investors' expectations. Kaiser's choice is based on his personal preference. It cannot be concluded from it that Bitcoin will give lower returns in future.

In the final, stocks, oil and gold fought it out, and the stock market won to take first place. Kaiser gave the reason that investing in the stock market gives an investor a direct stake in many good, profit-making companies. There is no need to search for individual companies; buying one good index fund may even be enough. Gold, by contrast, depends on a single commodity. The stock market lets an investor share in the growth of many industries of the economy without depending wholly on one business or commodity.

Despite choosing the stock market, Kaiser has not advised buying shares of any particular company. He has also not laid out any fixed figures on which index fund to buy, what share of total investment to keep in stocks, or how much return to expect over the next five years. His pick among asset classes is only a personal preference and should not be treated as investment advice.

Risk must be kept in mind when investing in the stock market. Even over a short or medium period such as five years, the stock market can see large swings. Even so, the main message of the analysis is that if an investor had to choose just one asset class for the next five years, Kaiser would make the stock market, which gives ownership in many good companies, his first choice. In his comparison, the stock market beat gold, Bitcoin, bonds, cash, private equity and oil.

Every investor has different financial goals, risk appetite and investment horizon, so one expert's pick is not necessarily right for everyone. When investing for the next five years, it is important to learn about the different options, understand the risks and, if needed, take the help of a financial adviser. More important than expecting the highest return is that an investment is made thoughtfully and in line with one's financial goals.