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Some Americans believe that real estate and gold are the best long-term investments. The advisor thinks it’s misguided.
Approximately 37% of US adults surveyed consider real estate to be the best investment over the long term, according to a new report from global analytics and advisory firm Gallup. That figure has remained largely unchanged from 36% last year.
Gold was the second most popular choice, with 23% of respondents surveyed. That’s 5 points higher than last year.
By comparison, only 16% trusted stocks or mutual funds as the best long-term investment. A 6% percentage point decrease from the 2024 report, Gallup found.
The company voted 1,006 adults in early April.
Financial advisors warn that this preference is more about buzz than basic. It’s important to note that Lee Baker, founder, owner and president of Claris Financial Advisors in Atlanta, gets caught up in the hype.
“People are constantly chasing the hottest things, and that’s the stupidest thing you can do,” said Carolyn McClanahan, CFP and founder of Life Planning Partners in Jacksonville, Florida.
There are things investors need to know about gold and real estate, and how to incorporate them into your portfolio.
Why gold and real estate are attractive
Baker understands why people prefer real estate and gold ideas. Both are concrete objects and stock.
“You buy a house, see, feel, touch it. You feel that investing in stocks is probably not realistic,” said Baker, a member of CNBC’s Financial Advisors Council.
Gold preferences have grown this year, but the share of Gallup respondents who think it’s the best long-term investment is still below the record high of 34% in 2011. At the time, gold investors were sought to evacuate amid unemployment, a crippling housing market and volatile stocks.
Gold prices have risen this spring. Spot Gold prices hit an all-time high of over $3,500 per ounce in late April. A year ago, the price ranged from about $2,200 to $2,300.
Also, real estate has attracted more attention in recent years amid high demand from buyers and amid accelerating prices. According to Bankrate, the median sale price for existing US homes in March was $403,700. This is down from the record high of $426,900 in June.
Why stocks are a better bet
Real estate and gold are two assets that can be valued over time, but the stock market generally grows at a much higher rate, experts say.
The S&P 500 shares’ total annual return rate is 10.29% for the 30 years ending in April, per Morningstar direct data. In the same time frame, the annual total return on real estate is 8.78% and gold is 7.38%.
McClanahan also means that unlike gold or real estate, stocks are diversified assets. This means focusing your cash on one investment.
“When you talk about stocks, you’re not talking about one big asset,” she said. “You’re talking about thousands of companies doing different things.” McClanahan is also a member of the CNBC FA Council.
The concreteness of gold and real estate may provide a sense of comfort, but it will make them illiquid or difficult to cash out, McClanahan said.
How to include gold and real estate in your portfolio
If you’re among the Americans who want to be exposed to real estate and money, there are many different ways to make it smarter, experts say.
In the case of real estate, financial advisors say investors may consider investors looking at real estate investment trusts, also known as REITs, or investing in bundles of real estate stocks, such as funds traded on exchanges.
REITs are public companies that invest in residential or commercial real estate that generates a variety of income, such as apartments and office buildings.
You can often purchase stocks of REITs, like stocks or stocks in REIT mutual funds or exchange trading funds. REIT investors usually make money through dividend payments.
Real estate mutual funds and exchange trading funds typically invest widely in multiple REITs and real estate markets. It’s even more diverse than investing in a single REIT.
Either way, you are exposed to real estate without focusing on a single property, which will help diversify your portfolio, said McClanahan.
Just like gold, instead of replenishing your bullishness, consider investing in gold through ETFs.
That way, don’t deal with finding a place to store or hide physical gold. It thoroughly washes away stolen or covers household insurance secrets, experts say.
“With ETFs you actually get the value of a gold refund, but you don’t actually own it,” McClanahan said.
