Real Estate and Gold: Are They the Best Long-Term Investments?
Introduction
Year after year, surveys show Americans overwhelmingly view real estate and gold as the best long-term investments. But are these perceptions justified or simply comfort-driven decisions? This article delves into whether real estate and gold deliver superior returns over time, examines why Americans choose them despite historical evidence to the contrary, and discusses the importance of a balanced portfolio for long-term financial health.
Why Americans Pick Real Estate and Gold
According to a 2025 Gallup poll, more than one-third (37%) of Americans consider real estate the best long-term investment. This is followed by gold (23%) and stocks (16%). For over a decade, real estate has consistently topped the poll results, while gold has maintained its presence against stocks.
Both assets are favored for their perceived stability, success, and security. Gold, in particular, is seen as a safe haven during times of economic uncertainty and rising inflation. Real estate offers tangible assets and potential rental income, which can provide a sense of security and steady financial gain.
How Real Estate and Gold Perform vs. Stocks and Bonds
Despite their appeal, the performance of real estate and gold compared to stocks and bonds is often less favorable over extended periods.
- Stocks Outperform: Historically, stocks have outperformed both real estate and gold, with dividends further enhancing returns. Over the past 15 years:
- The Vanguard Real Estate ETF (VNQ) has delivered annualized returns of about 8%.
- SPDR Gold Shares ETF (GLD) and iShares Core US Aggregate Bond ETF (AGG) have returned around 6.4% and 5%, respectively.
- Historical Returns:
- S&P 500 index via the SPDR S&P 500 ETF (SPY): Average returns of 17.1%
- Invesco QQQ Trust, tracking the Nasdaq-100 index (QQQ): Slightly better at 18.5%
Gold’s performance can lag during growth periods due to its limited diversification benefits compared to broader market indices.
Investing Beyond the Crowd Favorites
While real estate and gold do offer certain advantages—such as hedging against inflation or providing a diversified asset base—it’s important to consider individual needs and long-term financial goals. Here are some factors to keep in mind:
- Liquidity Constraints: Real estate’s lack of liquidity can be problematic, particularly for younger investors who may need more flexibility.
- Diversification: A well-balanced portfolio should include a mix of liquid income-producing assets such as stocks and bonds. This helps achieve both growth and stability.
For younger or more risk-averse investors, focusing on diversified investments may offer better liquidity and greater adaptability to changing market conditions.
The Bottom Line
While real estate and gold remain popular choices, their performance cannot be equated with long-term financial success. An expertly balanced portfolio that includes a variety of investment options is more likely to fulfill your long-term goals.
- Determine Your Needs: Consider what problem you’re aiming to solve: growth, safety, or market volatility?
- Shape Your Strategy Appropriately: Formulating an investment approach based on these considerations will help align your strategies with achieving financial stability and growth.
By making informed decisions and maintaining a diversified portfolio, you can navigate the complexities of the market more effectively.