Investors are forever destined to go through periods of optimism and pessimism; confidence and gloom; ambivalence and uncertainty.

But can we make decent returns, without going on a roller-coaster ride, or is the only option to put cash in the bank and see its value gradually eroded over time by inflation?

Safe haven

Gold has typically been a safe haven in times of fear and trouble. And these days it’s a simple matter to buy a fund that tracks the price of gold. The long-established SPDR Gold Trust is popular with US investors, while in the UK options include ETF Securities Physical Gold.

You only have to look at the financial crisis for confirmation of gold’s safe-haven credentials. While equity markets collapsed dramatically in 2008, the SPDR Gold Trust gained 5%.

All well and good. But gold can be as volatile as equities. For example, we’ve seen gains and falls of as much as 30% in a single year over the past decade.

Never lose money

One of the most famous dictums of equity investor extraordinaire Warren Buffett is: “Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.” So, should we entrust our cash to Buffett’s Berkshire Hathaway (NYSE: BRK-B.US)?

Well, Buffett’s above dictum is more about avoiding irreversible losses from the collapse of a poor business than about avoiding the ups and downs of a company’s share price, for he has also said: “Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market”.

Berkshire Hathaway’s shares plunged by more than 30% in 2008, while its best year over the last decade has been a rise of more than 30%. With Buffett, then, you’re on no less of a roller-coaster ride than you are with gold.

The table below shows annual returns over 10 years for SPDR Gold, Berkshire Hathaway and the third subject of this article Personal Assets Trust (LSE: PNL).

  2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
SPDR Gold 22.2 30.6 5.0 24.0 29.3 9.6 6.6 -28.3 -2.2 -10.7
Berkshire 24.1 28.7 -31.8 2.7 21.4 -4.7 16.8 32.7 27.0 -12.5
Personal Assets 8.5 -2.1 -3.2 19.4 14.4 8.3 4.2 -4.7 10.3 1.7

Source: Morningstar

Let’s get personal

As you can see from the table above, Personal Assets Trust (PAT) has progressed over the last 10 years without the big ups and downs displayed by both gold and Berkshire.

This is because PAT’s investment policy “is to protect and increase (in that order) the value of shareholders’ funds per share over the long term”. In practical terms, “this means that we try to make as much profit as we safely can when markets rise and minimise losses or even achieve modest gains when markets fall”.

The price for PAT’s comforting low volatility over the past decade has been a decent annualised return of 5.8% — which is, however, somewhat lower than gold (6.2%) and Berkshire (8.7%).

In its latest results, released this week, PAT reported that since 1990 its net asset value has increased by 548% compared with the FTSE All-Share’s 228% and RPI’s 109%.

If this kind of return, without a roller-coaster ride, appeals to you, you may want to have a look at PAT’s latest annual report. Indeed — for all investors — the trust’s assessment of the current climate for investing (on page 3) is well worth a read.

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G A Chester has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Berkshire Hathaway (B Shares). We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.