What are the best investments? High returns on paper do not necessarily mean high returns in real life. You need to be able to stick with a portfolio to get the long-run returns that it offers. It turns out that the best investments are the ones that you can live with.

How would you respond to a market crash? There hasn’t been a single losing year in the stock market since the Financial Crisis of 2008. That has me worried because too many investors have never been through a real bear market. Even grizzled veterans of the fierce bear markets of the early 21st century are now ten years closer to retirement and perhaps less able to withstand losses.

A good way to tell if you can live with a portfolio is to look at the worst year and imagine it happening to you this year. Would you really stay with an all-stock portfolio after losing 36% in a single year? If you’ve ever sold near the bottom before, then you already know that you would not. Another major crash would not be surprising because the stock market is even more overvalued today than at the beginning of 2008.

Fortunately, a more diversified portfolio can still provide very competitive returns while protecting you from large losses. A portfolio with an equal mix of stocks, 10-year treasuries, and gold has returned about 9.5% per year since 1971, while the S&P 500 had average annual gains of around 10.5%. That extra one percent a year comes at a very high price in the form of higher volatility, sleepless nights, and pressure to sell. With equal amounts of gold, stocks, and bonds, you would never have lost more than 10% in any calendar year. Even better, you always would have recovered your losses after only a year.

A diversified portfolio is also much easier to live with when disasters strike. Tragedies like 9/11 and Hurricane Sandy have shut down the stock market in the past. When that happens, investors with all stock portfolios lose access to all of their funds. Then there are the everyday threats like hackers and frozen accounts. If you own gold coins and bullion directly, then you have an asset that is always available when you need it.