Cash Is America’s Favorite Investment

When it comes to investing, it seems that people prefer cash – if they don’t need the money back very soon.

A recent survey indicates that cash investments are among the most popular types of investments among folks who don’t need their money back for more than 10 years. Fifty-four million Americans answered the survey, and 23% said that cash was the best investment they could make, if they didn’t need the money right away.

Along with cash, real estate is a hugely popular long-term investment. One-quarter (25%) of those surveyed wanted to invest in real estate. Stocks, precious metals, and bonds were all rated less well, with bonds especially unpopular, only scoring a 5% popularity rate.

But financial advisors warned that these statistics do not indicate a smart investment strategy. “While cash investments are entirely appropriate for short-term needs, such as an emergency fund, they are completely inappropriate for long-term investment horizons,” said the chief financial analyst of the firm that did the survey. “Returns on cash investments often trail the rate of inflation, with savers losing buying power as a result,” explained the analyst.

The survey also found that folks making less money were more likely to make cash investments. Households with annual incomes under $50K strongly prefer cash as an investment. Young people ages 18 to 25 also wanted to use cash to build their futures, stashing away money they don’t expect to need for more than 10 years. Older Millennials – those 26 to 35 – were more likely to want to want to put their money into real estate.

Probably the best course of action for someone who wants to invest in their future is to make sure they don’t have any credit card debt. Instead of investing with cash, folks can pay off debt using a balance transfer credit card for a 0% APR. Paying off debt is a great investment in the future, and more important than putting money into an investment, whether that’s cash or something else. Once credit card debt is paid off with a balance transfer card, get a low-APR credit card for every day use and keep the balance low.

Investing in the future is always a smart move, the survey’s authors insist. But doing it the right way is important. And using cash as your long-term investment strategy is not smart, cautions the analyst behind this survey.