William Simpson
Although most Americans have money saved in the stock market, that’s not what they consider the best long-term investment, according to a new study. survey from Gallup. So what is it?
That would be real estate, with 36% of respondents pointing to this ancient pillar of the American dream as the best place to invest their money, concluded the organization of surveys in its annual survey on economics and personal finances. Stocks came in second, with 22% rating them as the best choice for returns over time.
The survey offers insight into the mindset of the typical investor, whose views may be influenced more by the recent pandemic rise in housing prices than by the actual long-term returns of property ownership versus stocks. Admittedly, real estate can certainly deliver, with the asset class posting a return of around 215% since 2000, according to the S&P CoreLogic Case-Shiller Residential Index.
However, the S&P 500 returned 287% over the same period.
Home values have fallen since their all-time high in late 2021, when the median home sales price reached $479,500, but home prices are still well above their typical pre-pandemic levels, Gallup noted. Meanwhile, the S&P 500 reached an all-time high on Wednesday after new data showed that inflation decreased slightly last month.
“The recent performance of real estate and stocks likely explains their high position on the list this year,” Gallup said.
About 62% of Americans say they invest in the stock market, which can include individual stocks, mutual funds or money held in a retirement savings account, according to Gallup. This has changed little from last year’s survey, but reflects one of the highest rates of share ownership since 1998, when the organization began tracking the measure.
Gallup based its finding on a telephone survey conducted in April of about 1,000 adults living in the US.
Is gold a good investment?
Meanwhile, around 18% of respondents said they considered gold to provide the best long-term returns, down from 25% the previous year.
Gold is often seen as a hedge against inflation, which has attracted more investors to the precious metal in recent years. Over the long term, gold has been worth its weight in gold, with the price of an ounce of the shiny metal rising about sevenfold since 2000.
Still, investing in gold has its drawbacks, including the hurdles of to withdraw of investment compared to the ease of selling shares and other liquid investments. Gold also doesn’t pay dividends or interest, unlike stocks, bonds, CDs, and other equity.
Interestingly, Gallup found a partisan divide when it comes to attitudes toward gold, with 27% of Republicans viewing the metal as a good long-term investment, compared to just 7% of Democrats.
This could also come down to differences of opinion on the economy, with Republicans more likely to advocate negative reviews about the current economic situation than the Democrats. If you believe inflation could rise again, for example, you are more likely to turn to gold as a way to hedge your bets.
What types of financial instruments are not considered long-term investments, according to Gallup’s findings? Just 13% of respondents said they like savings accounts or CDs, perhaps a hangover from the years of meager returns when the Federal Reserve kept interest rates near zero after the 2008 financial crisis. And just 3% of respondents indicated a liking for cryptocurrency, which is notoriously volatile.
