Survey: Real estate and cash top Americans’ list of preferred investments over next 10 years

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Real estate is Americans’ preferred investment choice for the long term, according to a new study from Bankrate. Real estate has been the top choice in five of the last seven years, and last took the crown in Bankrate’s 2019 survey.

The survey reveals that 28 percent of Americans prefer real estate as the way to invest money not needed for 10 years or more. That’s up from 26 percent last year, when stocks received the top honors.

Americans also had a real fondness for cash in this year’s survey, with cash (including savings accounts and CDs) making its strongest showing since 2014, as 25 percent of respondents cited it. Surprisingly, the surge in popularity comes as interest rates sit at record lows and with little potential for returns.

Meanwhile, just 16 percent of Americans picked stocks, down sharply from 28 percent last year.

“The strong preference for cash is ironic given record low interest rates and renewed concerns about inflation, and could be particularly damaging the longer inflation exceeds returns on cash investments,” says Greg McBride, CFA, Bankrate chief financial analyst. “While the pandemic has underscored the need to have sufficient short-term savings, cash investments do not pay off over long time periods.”

Bankrate surveyed 1,008 American adults from May 25-30 about their investment preferences. Below are the main findings from the survey.

Key takeaways:

Real estate is the most popular long-term investment

Real estate topped the survey of Americans’ preferred investment over the next decade, notching 28 percent of the vote. The results marked a return to the top spot for real estate, which last held the position in Bankrate’s 2019 survey.

In second place was cash or similar investments such as CDs or savings accounts, which garnered 25 percent of the vote. The stock market rounded out the top three, with 16 percent.

Stocks have fallen out of favor with respondents since last year, when they took the top spot for 28 percent of Americans, despite a year of rising stock prices and low downside volatility. This year’s figure was the poorest showing for stocks in the survey since 2016. The stock market ran a distant third to real estate and cash from 2013-2017, despite a raging bull market in stocks.

“Sentiment on the stock market has seesawed back and forth over the past five years, but building wealth over the long term means remaining committed to holding on and consistently investing through the inevitable ups and downs,” McBride says.

Gold and other precious metals were the pick for 13 percent of Americans, down slightly from last year’s 14 percent and within the same range since 2013.

Cryptocurrency such as Bitcoin gained more popularity, picked by 9 percent of respondents, up from 4 percent in 2019 and 2020 and just 2 percent in 2018.

Bonds were the choice of just 4 percent of Americans, in line with last year’s results and tied with the lowest levels in the nine years of the Bankrate survey.

About 4 percent of Americans cited an investment other than these, while a further 2 percent said they didn’t know or refused to answer.

Americans still mostly uncomfortable buying cryptocurrency

While cryptocurrency such as Bitcoin has shown notable gains in the survey over the last few years, most Americans are still uncomfortable investing in it. About 61 percent say they are “not too comfortable” (28 percent) or “not at all comfortable” (33 percent) investing in it.

About 35 percent of Americans say they have some level of comfort when investing in crypto. Around 9 percent are “very comfortable” owning it, while a further 26 percent are “somewhat comfortable.” About 4 percent admit to having never heard of Bitcoin or cryptocurrencies.

Comfort level declines with age, with 51 percent of younger millennials (ages 25-31) “somewhat” or “very comfortable” investing in crypto, compared to just 16 percent of those age 67 or older.

Inflation isn’t affecting how Americans invest

Bankrate asked Americans: “How will inflation concerns change how you invest money you wouldn’t need for more than 10 years?” The results suggest that inflation doesn’t seem to have much of an effect on how Americans invest their money long term:

  • About 58 percent say that inflation won’t change how they invest.
  • Around 20 percent say they’d invest more aggressively.
  • Another 20 percent say, surprisingly, they’d invest less aggressively.
  • About 2 percent of respondents didn’t know or refused to answer.

At 29 percent, millennials had the highest likelihood of saying they’d invest more aggressively due to higher inflation. Generation X and baby boomers came in at 19 percent and 14 percent, respectively, while just 6 percent of the Silent Generation said they would.

Investment preference varies significantly by age

So exactly which age groups preferred which investments over the next decade? The Bankrate results shed some light on who liked each type of investment most and least.

  • Real estate was most preferred as a long-term investment by younger millennials at 33 percent, while it was least preferred by baby boomers at 27 percent.
  • Cash was most preferred by older millennials (age 32-40), at 31 percent, compared to 25 percent of Generation X and 21 percent of younger millennials and baby boomers.
  • The stock market was preferred most by younger millennials and those under age 30, with 20 percent tapping it. Meanwhile, stocks were least preferred by Generation X at 11 percent.
  • Preference for cryptocurrency skewed younger, with 14 percent of younger millennials and those under age 30 saying it’s the best way to invest. Just 9 percent of older millennials and Generation X cited crypto, and only 5 percent of baby boomers.

Investment preferences vary significantly by income and education

Americans’ investment preferences over 10 years or more vary widely by household income and educational attainment.

  • Real estate ranged in popularity from 22 percent for the lowest-income households and those with a high school degree or less to 36 percent of the highest-income households and college graduates.
  • Cash investments were cited more than twice as often (30 percent) among households with income below $75,000 as among those with $75,000 or more (14 percent).
  • The stock market was preferred by the highest-income households ($75,000 or more) at 22 percent, or about twice the rate as the lowest-income households ($30,000 or less) at 11 percent.
  • The preference for cryptocurrency, around 8 to 9 percent, was consistent across households regardless of educational attainment.

Methodology

This study was conducted for Bankrate via phone interview by SSRS. Interviews were conducted from May 25-30, 2021, among a sample of 1,008 adults. Data are weighted and are intended to be representative of all U.S. adults, and therefore are subject to statistical errors typically associated with sample-based information.

Written by
James Royal
Senior investing and wealth management reporter
Bankrate senior reporter James F. Royal, Ph.D., covers investing and wealth management. His work has been cited by CNBC, the Washington Post, The New York Times and more.
Edited by
Senior wealth editor