What’s the Best Long-Term Investment?

Looking for the best long-term investment? A recent Gallup poll reveals where Americans stand on various investment options, with real estate taking the top spot. We’ll break down the rankings and examine why real estate is preferred over stocks, gold, savings accounts, and cryptocurrency. By understanding the benefits and risks associated with each option, you can make informed decisions about where to allocate your investment dollars. We'll also look into why real estate offers significant advantages, including appreciation, principal reduction, and tax benefits, making it a strong contender for your investment portfolio.

Best Long-Term Investments Ranked by Americans

Real estate was number one, with 36% of those polled considering it the best long-term investment. Stocks followed at a significant difference, with 22%. Gold came in slightly below stocks at 18%. Savings accounts were at 13%, and cryptocurrency at 3%.

Before we discuss real estate being number one, let’s look at the other types of long-term investments. Stocks, at number two, had a notable differential of 36% to 22% compared to real estate. This is surprising given the recent record bull run in stocks. It's not unexpected that stocks are second, but the public views the differential as significant despite the recent stock market highs.

Gold, slightly below stocks, serves as a big inflation hedge. Its value has surged over 25%, with silver up over 30% in recent months. Interestingly, opinions on gold fall along partisan lines: 27% of Republicans see it as the top investment, while only 7% of Democrats do. This difference is noteworthy as we approach an election year, reflecting differing views on the economy, debt, and inflation.

Savings accounts are next at 13%. If you chose this option, you might want to reconsider. Savings accounts and CDs do not offer the best long-term returns. Their yield is often just above or below inflation, and taxes further reduce returns. There’s also risk if your balance exceeds FDIC limits, and concerns about the long-term stability of fiat currency. If a fiat currency crash occurs, savings accounts would suffer as well.

Cryptocurrency ranks at the bottom with 3%. It's surprising that it ranks below savings accounts, but it is a much riskier investment. With nothing backing it, its value depends on global circumstances and the ability to transfer currency. Despite its risk, it still polled in at 3%.

Why Real Estate is the Best Long-Term Investment

As mentioned in other videos, real estate pays in three ways, plus a bonus way. First, appreciation: with a 5% down payment, 5% appreciation can double your money, or give a 25% return on a 20% down payment. Appreciation is a huge multiplier, especially when borrowing from the bank.

Second, principal reduction: a portion of each payment reduces the mortgage principal. Renters’ payments go to the landlord’s mortgage, while homeowners build equity with each payment, accessible through selling the home or a home equity line of credit.

Third, tax advantages: the U.S. government offers tax benefits for borrowing money, which supports money creation, inflation, and deficit spending. These benefits aren’t available with stocks, gold, or other investments.

The bonus is an inflation hedge. Your 30-year fixed mortgage payment remains flat, except for insurance and taxes, while rent typically increases. Fixed payments mean you pay less in future dollars, offering significant advantages.

If you chose real estate as your top investment, kudos to you. If you didn’t and want to learn more about real estate investing or buying your first home, call us today at 256-333-MOVE. We’d be happy to provide a buyer’s consultation, whether it’s your first home or a second home for investment.

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