Stocks have long been the most glamorous of the major asset classes. Many a Hollywood film has centered around making fast money in the stock market, and becoming a Wall Street big shot.
But despite their great long-term returns — they’ve averaged about 10% annually for decades — stocks are no longer Americans’ favorite long-term investment. What is? According to a nationwide Bankrate survey, it’s real estate.
Years after a housing crash that left the economy hurting, many Americans still see real estate as their top pick. Some 31% of survey respondents named real estate as their favored investment for money that they wouldn’t need for 10 years or more. It’s the best showing for real estate in the seven years that Bankrate has conducted the survey.
In 2018, stocks were the most popular investment. But this year they ran a distant second, with 20% of respondents naming stocks their top pick for holding periods of more than a decade.
Cash investments, such as savings accounts and CDs, finished third at 19 percent, while gold and other precious metals earned 11 percent. Americans picked bonds as their top long-term investment 7% of the time, while bitcoin and other cryptocurrencies were favored by 4 percent. Meanwhile, 5% of respondents said that none of these options were the best way to invest.
While some commentators have bemoaned the fact that millennials seem unwilling to buy housing, it’s not for lack of desire. Millennials in total scored the highest (36 percent) among all age groups in their preference for real estate as a long-term investment.
While millennials might be the most drawn to property, real estate still remained the most popular investment among all generations, from millennials to Generation X (31 percent), as well as baby boomers (30 percent) and the Silent Generation (23 percent).
“Millennials are higher on real estate than any other age group, have cooled a bit on cash, and still aren’t keen on the stock market when investing for more than ten years,” says Greg McBride, CFA, Bankrate chief financial analyst.
Strikingly, the preference for real estate is virtually identical in all four income categories surveyed by Bankrate. Between 32 and 34% of the time it was the top investment choice for those surveyed in a wide range of income brackets.
Home — or least, real estate — is where the heart is for Americans.
While real estate outdistanced stocks in each age and income demographic, stocks were more popular with higher earners compared to those with lower incomes. In fact, stocks were two and almost three times as popular with the highest income groups in the Bankrate survey.
For two groups with incomes of at least $50,000, stocks were their top pick 28% and 29% of the time, just behind real estate. For the two groups earning less than $50,000 annually, stocks were their top pick only 15% and 11% of the time.
In fact, the higher a respondent’s earnings, the more likely the choice of their favored investment was stocks.
Meanwhile, lower-income households showed a higher preference for cash investments such as savings accounts and CDs (22 percent), as well as for gold and other precious metals (12 to 17 percent).
Bankrate commissioned market and survey research firm SSRS to do the survey. Conducted via telephone, there were 1,015 people who took the survey at the end of June.