AAII Survey: Retail Investors Weigh in on Best Long-Term Investment

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There is a mountain of academic research and real-world data that show stocks, in the long run, as the best investment, even adjusted for risk. That is not to say there are periods when other asset classes—real estate, bonds, etc.—will outperform stocks. These periods test our patience as investors, and some fall victim to chasing returns, only to mistime the market and incur trading fees that further erode their returns.

AAII Weekly Survey Question

While long-term history has shown the strength of stocks, we were curious to see if our readers feel the same. So, last week’s survey question asked:

Which of the following do you think is the best long-term investment?

Here are the results:

In all, 2,819 readers participated.

By an extremely wide margin, our readers feel that equities—either individual stocks or equity mutual funds—are the best long-term investment, with 87% of the votes. Lagging far behind in second place, with 11% of the votes, is real estate. Both gold and bonds each received 1% of the votes while only 14 readers (0.496%) feel that savings accounts or CDs are the best long-term investment.

Weekly Special Question

As we mentioned earlier, there are periods when stocks underperform other asset classes. To get an idea of what our readers feel are the biggest threats to their best asset class, we followed up with this special question:

Given your “best” asset class for the long term, what do you see as the biggest risk to its performance?

In all, we received 557 responses.

Generally speaking, the responses fell into three broad categories:

  • Market-related (37%)
  • Political (35%)
  • Economy (30%)

Overall, our readers see the economy as being the single biggest driver of asset returns with nearly 11% of the responses. Close behind was investor psychology nearly 9% of the responses. Rounding out the top three was inflation/interest rates with 8.4% of the responses.

Among the other top responses include:

  • Government policy (6.5%)
  • Geopolitics (5.0%)
  • Short-term market focus (4.3%)

Here is a sampling of the responses readers offered regarding whether they view rising bond yields in either a positive or negative light:

  • “Taxes, inflation and incompetent Government policies.”
  • “I see the greatest risk to performance [of stocks] is the growing debt, not only of the U.S. but the global economy. The cost to service this debt will be a drain on global economic growth perhaps for decades, which will result in a lackluster gain in equities.”
  • “Out of control inflation.”
  • “A long-term bear market.”
  • “Investors’ fear, greed and lack of commitment.”
  • “Short-term volatility.”
  • “Government interference.”

Everybody has an opinion! Why not give us yours? Participate in our weekly member poll, updated every Monday, and see the results online at www.aaii.com/memberquestion.

 

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