Real Estate Trails Behind Stocks As Americans’ Favorite Way To Invest

In the age of a coronvirus pandemic, it might be tempting to hide your money under a mattress and accept uncertainty about the economy, employment and finances. But, as it turns out, investing in real estate is a popular way to invest over a period of 10 years or more, right behind the stock market, according to a new Bankrate.com survey. 

Twenty-six percent of survey respondents, down from 31% last year, look to real estate as one of the best possible investments they can make for money not needed for a decade or longer versus 28% who favored the stock market.

“Despite stocks falling by more than one-third in just over a month at the outset of the pandemic, more Americans point to the stock market as the best place to invest money long term,” said Greg McBride, chief financial analyst. “The swift rebounds this spring and following a 20% decline at the end of 2018 have convinced more investors of the market’s long-term merits.”

He pointed out that Millennials are turning their attention to the stock market and precious metals.  “Millennials shifted away from real estate and toward stocks as the preferred way to invest over the long-term,” said McBride. “Gold and other precious metals also saw a noticeable increase in appetite among Millennial investors.”

Real estate was a more popular choice than cash investments such as savings accounts or certificates of deposit (18%), gold and other precious metals (14%), bonds (4%) and bitcoin or other cryptocurrency (4%).

The stock market was most popular among the highest earners (39% making $75,000 or more per year versus 22% making less than $30,000) and those with a college degree (37% versus 23% with no more than a high school diploma). Relative to other income groups, lower earners were more likely to cite cash (25% making less than $30,000 versus 12% making $75,000 plus) or gold or other precious metals (18% vs. 10% of the highest earners).

“The stock market has staged a nearly 50% rebound from the March lows, and gold is up more than 33% in the past year,” said McBride. “Over time, investors tend to chase performance, but you’re only going to get the higher long-term results in the stock market if you’re willing to hang in there and invest more when the market pulls back.”

Bankrate surveyed 1,007 American adults from June 29 to July 5 about their investment preferences. Of all those not pointing to the stock market as the best way to invest long-term, more than half (54%) said the coronavirus pandemic played a part in their decision; 34% said it was a major reason, 19% said it was a minor reason and 43% said it had no impact (the rest didn’t know or refused to answer).

Men (40% versus 29% of women) and Baby Boomers (39% of those ages 56 to 74 versus 33% of Gen Xers, 40-55, and 29% of Millennials) not selecting the stock market were more likely to say that the pandemic was a major reason why.