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Stocks Still Trail Real Estate as Preferred Investment

Stocks Still Trail Real Estate as Preferred Investment

Story Highlights

  • Americans choose real estate as best investment for fifth straight year
  • Preference for stocks remains steady near 25%
  • Gold, mentioned by 17%, down by half from 2011 peak

WASHINGTON, D.C. -- More Americans name real estate over several other vehicles for growing wealth as the best long-term investment for the fifth year in a row. Just over a third cite real estate for this, while roughly a quarter name "stocks or mutual funds." Gold, mentioned by 17%, roughly ties "savings accounts or CDs" at 15%, while only a few Americans, 6%, name bonds.

Line graph: 2011-18 trend in Americans' views of best long-term investment. 2018 high: real estate (34% “best”); gold was tops in 2011.

Americans' views have been fairly steady since 2015, but are a change from 2011 to 2014, when gold had greater appeal. U.S. adults' relatively high confidence in gold in 2011, when 34% considered it the best investment, was at the end of a period of double-digit growth in gold prices. At the same time, the stock market was still recovering from the 2008-2009 downturn and housing prices were still declining after the bursting of the mid-2000s housing bubble.

Gold prices have subsequently retreated as the stock and real estate markets have made strong gains, explaining the shift in Americans' views of the best place to invest.

The percentage of Americans naming traditional savings accounts and CDs or bonds has been consistently low since 2011 -- a reasonable position, given that interest rates have been at or near historical lows during this period.

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Real Estate Tops Among Most Subgroups, Especially Westerners

Real estate is the top-ranking type of investment among most subgroups of Americans, including across gender, age and income categories -- with a few notable exceptions. Young adults and residents of the East and Midwest are about equally as likely to name stocks as real estate, and lower-income Americans' top choice is a tie between real estate and gold.

The selection of stocks as the best investment is fairly even by gender and age, but differs by household income. The percentage selecting stocks increases with income, from 19% among those earning less than $35,000 annually to 33% among those earning $75,000 or more.

Perceptions of Best Long-Term Investment Among U.S. Subgroups
Which of the following do you think is the best long-term investment -- [bonds, real estate, savings accounts or CDs, stocks or mutual funds, (or) gold]?
Real estate Stocks Gold Savings accounts/CDs Bonds
% % % % %
Gender
Men 35 27 18 10 7
Women 33 25 15 19 6
Age
18 to 34 29 28 11 21 9
35 to 54 37 25 18 15 4
55 and older 34 26 21 10 7
Income
$75,000 and over 43 33 12 5 6
$35,000 to $74,999 33 23 17 18 6
Less than $35,000 25 19 24 20 8
Region
East 36 34 11 14 4
Midwest 27 28 19 19 6
South 29 24 20 15 7
West 45 21 14 10 8
Gallup, April 2-11, 2018

Beyond the rank-order differences in perceptions of the best investment, residents of the West and upper-income Americans are more likely than their counterparts to identify real estate as the best choice.

The gap between the West and other regions in naming real estate has been particularly large in each of the past two years, but before that, the West was still among the most positive of all regions about real estate. By contrast, the Midwest has consistently lagged behind the other regions in valuing real estate. However, confidence in real estate has increased in all four regions since 2011.

Line graph: 2011-18 trend on real estate as best long-term investment, by region. West is tops (45% "best"), Midwest lowest (27%) in 2018.

Bottom Line

Americans' perceptions about the best vehicle for investing remain in a holding pattern, with real estate continuing as the top choice and stocks/mutual funds running a strong second. While the stock market has enjoyed an impressive nine-year bull market, including a better-than 20% average rate of return in 2017, the re-emergence of volatility earlier this year may be keeping a lid on any expansion of Americans' preference for stocks as the best investment.

One reason real estate may rank first is that more Americans own their own home than own stocks -- 63% and 54%, respectively. Regardless, given the importance of 401(k) accounts to Americans' retirement security, the reality is the stock market serves as an important investment vehicle for most Americans, making it critical that they have confidence in stocks as a way to grow wealth. In 2017, Gallup found 50% of nonretirees saying a 401(k) would be a major source of income for them in retirement, compared with only 9% counting this much on rent or royalties.

Whatever they believe to be the best investment, Americans need to save more. According to the latest Wells Fargo/Gallup Investor and Retirement Optimism Index survey, just one-third of U.S. investors -- those with at least $10,000 in investments -- are highly confident that they will have enough money saved to maintain their preferred lifestyle in retirement.

Survey Methods

Results for this Gallup poll are based on telephone interviews conducted April 2-11, 2018, with a random sample of 1,015 adults, aged 18 and older, living in all 50 U.S. states and the District of Columbia. For results based on the total sample of national adults, the margin of sampling error is ±4 percentage points at the 95% confidence level. All reported margins of sampling error include computed design effects for weighting.

Each sample of national adults includes a minimum quota of 70% cellphone respondents and 30% landline respondents, with additional minimum quotas by time zone within region. Landline and cellular telephone numbers are selected using random-digit-dial methods.

View survey methodology, complete question responses and trends.

Learn more about how the Gallup Poll Social Series works.

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Gallup https://news.gallup.com/poll/233294/stocks-trail-real-estate-preferred-investment.aspx
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