A recent survey reveals that a significant portion of U.S. adults views real estate and gold as the premier long-term investments. The survey results indicate that 37% of respondents feel real estate provides the greatest long-term return. Gold is the investment of choice for 23% of respondents. Financial advisors are warning that these conclusions can sometimes be misleading or mistaken.
Similarly, real estate has garnered a lot of focus during the past few years, fueled by strong buyer demand and rising home values. In March, the median sale price for an existing home in the United States reached $403,700. That’s a decrease from its high of $426,900 set in June. Even with the recent decrease, professionals stress that real estate has always generated strong returns.
As of the 30 years ending this past April, real estate has produced an annualized total return of 8.78%. This kind of appreciation potential is one of the big reasons many investors are attracted to real estate. Real Estate Investment Trusts (REITs) are one of the most accessible avenues for investors to take advantage of. First, they democratize access into this emerging asset class.
“The beauty of real estate is that you buy a house. You can see it, feel it, touch it,” said Lee Baker, an investment advisor. “Your investment in stocks perhaps doesn’t feel real.”
You’d think real estate was the hottest thing for Americans these days. Financial experts say 2020 election bidders shouldn’t get a sudden case of shiny object syndrome. Carolyn McClanahan, another financial advisor focused on the dangers of chasing market trends. “People are always chasing what’s hot, and that’s the stupidest thing you could do,” she stated.
Gold has attracted a lot of attention as prices rose sharply this spring. A year ago, gold was valued between $2,200 and $2,300 per ounce. Well, they’ve now truly exploded to levels that are five points more than that! In fact, during this time, spot gold prices soared to a historic high of over $3,500 per ounce at the end of April.
That share still hovers below the all-time peak of 34%, hit in 2011. Gold’s material properties provide security and peace of mind for investors that other asset classes are unable to deliver.
When you’re discussing stock, you’re not just talking about one monolithic asset, McClanahan added. “With the ETF, you actually get the value of the return of gold, but you don’t actually own it.”
Ultimately, for most investors, the decision between real estate vs gold comes down to which investment best aligns with their personal investment preferences and financial goals. Real estate offers more than potential appreciation though, it offers real world practical benefits, like housing. At the same time, gold continues to provide important benefits as a portfolio diversifier and hedge against economic uncertainty.