What is the best investment?
Portfolio diversification is one of the core principles of investing. Studies have shown that you can best navigate market ups and downs by spreading your assets across a variety of investment types and styles. The idea is to balance returns, as if one asset type or investment style is not preferred at any given time, another type is likely to be preferred.
For example, maybe a stock has been hot recently but is slowing down. Meanwhile, while the real estate winter still lingers, bonds were a mixed bag, cryptocurrencies soared and gold held firm. So right now, a diverse portfolio would be helpful.
But what do Americans see as the best long-term investment going forward? A new survey from Gallup has the answers.
Real estate and stocks are at the top
This week, Gallup released its annual Economic and Personal Finance Survey, which polled Americans from April 1 to 22 about what the best long-term investments are: stocks, bonds, real estate, cryptocurrencies, gold and savings accounts. Announced.
Despite the challenges of the past few years, real estate remains a top choice, with 36% of participants choosing it as their best long-term investment. The real estate market has slowed for a variety of reasons, both commercial and residential, with high interest rates and soaring prices being two of the biggest reasons. Real estate has recently shown signs of recovery, but uncertainty is still high.
Perhaps investors are hoping the market has bottomed. Nonetheless, this 36% share is down from 38% a year ago and is the lowest share since 2020.
The stock came in second place with 22% of the votes. Confidence in the stock market has risen since last year, when only 15% of respondents in a Gallup poll favored stocks. Stocks are preferred more by high-income (31%) Americans than by low-income (14%) Americans. Middle class income is at a medium level at 21%. Stocks are in the midst of a bull market, and while things could go sideways if the economy slows, there’s likely hope that lower interest rates will spur more growth.
Gold came in third place in the poll, with 18% preferring it as a long-term investment. The gold market has been strong in recent years. Prices for the yellow metal were up about 15% year to date as of May 16 and about 20% over last year. But the decline has stalled over the past month. Some analysts predict that the gold market will remain strong through 2024-2025. However, the percentage of Americans who view gold as the best long-term investment is 18%, down from 25% in 2023.
Cryptocurrencies and Bonds Lose Ground
Savings deposits, including CDs, recorded 13%. Although these accounts don’t offer much upside, they are a safe investment favored by low-income (20%) and middle-income (15%) Americans, compared to just 7% for higher earners.
The bond market has been mixed, with money market funds and short-term bonds performing well in this high-interest rate environment, while longer-term bonds have struggled. Just 4% of Americans polled said bonds were the best long-term investment. That’s because conservative investors seemed to prefer relatively safe savings accounts in a high interest rate environment.
Cryptocurrencies are a relatively new asset class, having only been added to the survey two years ago. In the survey, only 3% said it was the best long-term investment. This is not surprising considering its volatility over the years and the fact that not many Americans know more about it than other options.
However, in a survey last year, 4% of Americans chose cryptocurrency as the best long-term investment, and in a poll two years ago, cryptocurrency accounted for 8%. This year’s decline is somewhat surprising, considering the resurgence of Nikcoin and other cryptocurrency investments over the past year. However, some expect it to decline after the large investment.
The survey turned out to be a snapshot of how Americans think about investing. However, as mentioned at the beginning, the best strategy is a diversified portfolio featuring all or some of these asset classes.
