Real estate is once again America’s favorite long-term investment according to a nationwide Bankrate survey. 31% of Bankrate survey respondents named real estate as their favored investment for money that they wouldn’t need for 10 years or more. Average real estate appreciation keeps pace with inflation. However, you can do much better than inflation with leverage. This is the difference between Rate Of Return and Appreciation, and savvy investors know how to use leverage when investing in real estate.
In 2018’s survey, stocks were the most popular investment. However, stocks dropped to a distant second place in the 2019 survey, with 20% of respondents selecting stocks as their preferred investment for periods of 10 years or more. Stocks have averaged about a 10% annual return since 1962.
Coming in third place with 19% of survey respondents were Cash investments, such as savings accounts and CDs. Savings accounts and CDs have been averaging 1% to 3% annual returns.
Precious metals earned 11 percent. Gold is a long standing favorite of precious metal investors. Gold peaked in 2011, and has yet to return to those highs.
Americans picked bonds as their top long-term investment 7% of the time. Over the long term, stocks do better than bonds. Since 1926, large stocks have returned an average of 10 % per year. Long-term government bonds have returned between 5% and 6%, according to investment researcher Morningstar.
Bitcoin and other cryptocurrencies were selected by 4 percent of Bankrate survey respondents. Cryptocurrencies are a volatile investment. Cryptocurrency is most popular among younger investors.
5% of respondents said that none of these options were the best way to invest.