Let us talk about REAL ESTATE INVESTMENT. Movies have been made about it. Slick, suited traders create a frenzy on the NY Stock Exchange floor, and you wonder how anyone can hear their bids. Think Wall Street and the seedy Wolf of Wall Street. Stocks have long been associated with glamor and the ultimate in risk-taking, reserved for the rich and famous. Fast money is usually a badge of honor when the final bell rings for the day, finding investors either crying into their martinis or treating their buddies to a sumptuous meal and unlimited drinks.
Real Estate Investment Rules Once Again
According to a recent article in BankRate, despite their great long-term returns – stocks have averaged about 10 percent annually for decades. But things are changing. BankRate’s survey is finding real estate is once again becoming king. That which is tangible seems to be winning out.
“Years after a housing crash that left the economy hurting, many Americans still see real estate as their top pick,” says BankRates’ James Royal (great name for dealing with the upper crust, right?) “Some 31 percent of survey respondents named real estate as their favored investment for money that they wouldn’t need for 10 years or more. It’s the best showing for real estate in the seven years that Bankrate has conducted the survey.”
2018 found stocks to be the most popular investment. Fast forward a year, and they are running a distant second, with 20 percent of respondents naming stocks their top pick for holding periods of more than a decade. Cash investments, such as savings accounts and CDs, evidently finished third at 19 percent, while gold and other precious metals earned 11 percent. Americans picked bonds as their top long-term investment 7 percent of the time, while bitcoin and other cryptocurrencies were favored by 4 percent. Meanwhile, 5 percent of respondents said that none of these options were the best way to invest.
Millennials and Real Estate Investment
Millennials scored highest (36 percent) among all age groups in their preference for real estate as a long-term investment. Is it the HGTV house flip effect? Who knows? “While millennials might be the most drawn to property, real estate still remained the most popular investment among all generations, from millennials to Generation X (31 percent), as well as baby boomers (30 percent) and the Silent Generation (23 percent),” says Royal.
Bankrate’s chief financial analyst cgreg McBride, CFA, confirmed, “Millennials are higher on real estate than any other age group, have cooled a bit on cash, and still aren’t keen on the stock market when investing for more than ten years.
More data from the Bankrate study: the preference for real estate is virtually identical in all four income categories. Between 32 and 34 percent of the time, it was the top investment choice for those who reported earning more than $75,000 per year; in between $50,000 and $75,000; between $30,000 and $50,000; as well as less than $30,000. Real estate run the gamut from small-timers to those comfy investors with not a lot to lose. What does this mean? Royal concludes, “Home – or least, real estate – is where the heart is for Americans.
Bitcoin and Cryptocurrencies in Real Estate Investment
What about bitcoin and cryptocurrencies, you may ask?” Royal reports that younger generations prefer bitcoin are not shy about taking that plunge. Liken it to buying a Tesla, despite the risk. “Millennials picked cryptocurrencies as their top long-term investment about 9 percent of the time – about triple the rate of Generation X. Earlier generations had negligible numbers of respondents selecting virtual currency as their top choice.”
More surprising is that declining rates would appear to have little effect at all. Declining rates are not likely to move millennials to invest in the stock market, borrow money, or put money into savings accounts or CDs, according to respondents. “Just 40 percent of respondents said they would be more likely to move money into cash investments such as savings accounts and CDs in response to declining rates” says Royal. “Only 26 percent said they would be more likely to borrow more money in response to falling rates. Meanwhile, just 33 percent of respondents said they were likely to invest in the stock market as rates fell.”
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Source: BankRate, TBWS
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