By Beth McGuire
(TNS)—Given the recent record highs in the Standard & Poor’s 500 index and the Dow Jones industrial average, you might think Americans would feel excited about the future of the stock market. But you’d be wrong, a Bankrate national survey has found.
When we gave people a few choices and asked them to pick the best way to invest money they wouldn’t need for more than 10 years, the most popular answer was real estate. Next were cash investments, such as certificates of deposit and savings accounts.
The stock market was a distant third, tied with gold and other precious metals.
These preferences don’t match up with investing strategies that experts say will deliver the best returns over the long term.
Stocks Remain Unloved by Many
The bull market that started in 2009 and continues today is the second longest in U.S. history, but has yet to make a dent in Americans’ perceptions of the market, according to Bankrate’s polling data.
Back in 2013, relatively early in the bull market, 14 percent of Americans told us stocks were the best long-term investment available. Now, 16 percent feel that way.
Michael Weinfeld, a retired journalist living in Herndon, Va., is one of them.
He says that while he has experienced his fair share of market volatility — including losing half of his daughter’s college fund to the stock market crash of 1987 — he has enjoyed big gains over the long term by holding on tight.
“I’ve been riding the stock market up and down since the middle ‘80s, and I’ve learned a lot about how to weather all of these disasters,” Weinfeld says. “As long as you diversify and just wait it out, history shows that the market will eventually bounce back.”
Many Still Smarting From Market Bumps
Brad Barber, a professor of finance at the University of California at Davis, chalks up the relative unpopularity of stocks to leftover suspicion from the dot-com bust of the early 2000s and the financial crisis of 2008-2009.
“If you come of age in a period when you view the market as being tumultuous, that probably makes you less likely to invest in the stock market,” Barber says.
But those who stay out of the stock market on principle are probably doing themselves a disservice, says Avani Ramnani, a financial planner and the director of financial planning and wealth management at Francis Financial.
“You need to have a very well-diversified portfolio that should include stocks, bonds, some alternatives and real estate,” Ramnani says.
“Over the long period of time, we’ve seen that the stock market returns between 6-7 percent from a diversified portfolio,” she says — which beats many of the investment options that proved more popular in our poll.
Financial Security Improving
Americans may not be bullish on the future of the stock market, but their present is looking pretty good. For the 26th consecutive month, the Bankrate Financial Security Index — based on survey questions about how people feel about their debt, savings, net worth, job security and overall financial situation — shows Americans’ sense of …read more
From:: Real Estate News