It’s often said that the best long-term investment is real estate, especially your own home, but that’s not the finding of a new survey.
A survey of more than 1000 American consumers for Bankrate has found that while 24% of respondents said that real estate is the best investment for cash that is not needed for a decade or more, that was down from 29% in 2022 when it was last asked and was then the most-cited asset.
The decline means that it falls behind the stock market, which was the choice of 27%, up from 26% in 2022 and significantly higher than the 16% who chose this in 2021.
“Coming on the heels of back-to-back strong years for stocks - the S&P 500 index was up 24% and 23% -- Americans cited the stock market as their top long-term investment,” said Bankrate analyst James Royal. “That outstanding performance contrasts with a poor performance in real estate, where prices have been hammered by high interest rates.”
Gen Z are more likely to favor the stock market, while Gen X lead those who prefer real estate; perhaps reflecting a generation with many who feel homebuying is out of their reach vs. one where may are homeowners.
Higher income households are also more bullish on the stock market with 41% of those with an annual household income of $100K or more compared to just 14% of those making less than $50K.
Among those who are not fans of equities, 34% of those who did not choose this option citing market volatility as a turn off, 21% finding it intimidating, 13% feeling its rigged against individual investors, and 13% who prioritize preserving wealth rather than growing it.
Other assets among the top responses for best long-term investment were: cash investments such as savings accounts or CDs (21%), gold or other precious metals (9%), bitcoin or other cryptocurrencies (6%), and bonds (6%).
“Cash investments may be safe for the short term, but they don’t perform well over the long term, with inflation gnawing away at its purchasing power,” added Royal. “The strong returns in stocks over the last couple of years show the real cost of holding too much cash as a long-term investment, with investors missing out on tremendous gains for the perceived safety of cash.”
The relatively low rating for cryptocurrencies is also reflected in the 78% who say they are uncomfortable investing in these assets while just 20% were comfortable doing so. Typically, younger generations and men were more positive on cryptos and older generations and women were not.
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