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The S&P 500 slumped 1.61% last week and is lower by 1.07% over the past month. Obviously, the former data point is more alarming than the latter, but both serve as reminders that markets don’t move up in straight lines.
Those statistics are also reminders regarding the validity of investing for the long-term – advice that holds true across several traditional asset classes. Corrections, particularly in the world of stocks, are par for the course and to be expected. Advisors can take heart because data suggest more investors realize as much, want to invest for the long-term and they believe stocks are the best assets to help them accomplish their longer-ranging financial goals. Consider the findings in a new Bankrate survey.
“The stock market is the top place to invest for the long term, say Americans in Bankrate’s 2025 Long-Term Investment Survey. In all, 27 percent of Americans said they prefer the stock market as the way to invest money that they didn’t need for a decade or more. This figure is in line with the 26 percent who chose the stock market in the 2022 survey, the last time Bankrate conducted this survey.”
Why Survey Findings Matter to Advisors
The data points in the Bankrate study are meaningful to advisors for multiple reasons. First, that 27% viewing the stock market as their long-term wealth creator of choice is arguably too low, indicating advisors should discuss with clients what they’re thinking about in terms of long-term wealth building. Speaking of…
“Real estate also made a strong showing in this year’s survey, coming in second place, with 24 percent of Americans picking it as the top long-term investment,” adds Bankrate. “This figure was down from 29 percent in the 2022 survey, when real estate was the most preferred option.”
Real estate is a valid wealth creator. That point cannot be argued, but if clients are relying on real estate to set themselves up for long-term financial success, other factors need to be discussed. Those include addressing whether or not the client is aiming to be a real estate speculator (flipper), landlord or simply banking on their home increasing in value to the point that it supports their retirement. On that last point, factors such as location and the possibility of downsizing in retirement to realize and live off profits need to be discussed.
Advisors should also note why so many investors didn’t select stocks as their top asset class for the long term. The primary reason is market turbulence.
“Bankrate’s survey also revealed that the top reason Americans didn’t select the stock market as their preferred long-term investment was its well-known volatility,” according to the poll.
Investors Still Too Conservative
For as strong as stocks have been in recent years and over long holding periods, many investors – and this is why they should work with advisors –aren’t aggressive with their choices. Actually, they’re probably too reserved.
Twenty-one percent of respondents to the Bankrate survey said cash instruments are their preferred long-term investment while another 6% said bonds. Both are indicators of many market participants not understanding the effects of interest rates. Throw in the 9% that said gold and precious metals are the best asset for the long haul, and it’s evident too many people are too reserve about equities are uninformed about the advantages of investing in stocks for the long-term.
Advisors have the ammunition with which to change those views. From the start of 2014 through the end of last year, the S&P 500 returned 289.2%, including paid dividends. The largest gold exchange traded fund and the Bloomberg U.S. Aggregate Bond Index returned 105.2% and 20.4%, respectively, over that same span.
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