NEW YORK, July 29, 2013 /PRNewswire/ -- Investors' risk aversion even applies over long investment horizons, with Americans most commonly saying that cash investments are the best way to invest money not needed for more than 10 years, according to a new Bankrate.com (NYSE: RATE) report.
More than one in four Americans (26%) favor cash, edging out real estate (23%). One in six (16%) favor gold or other precious metals, even though those investments have been pummeled in 2013, while only 14% say stocks would be their choice. Just eight percent of Americans chose bonds.
"Americans not saving enough is well-documented, but hunkering down in cash investments and settling for low returns will only magnify the problem of not having a sufficient nest egg to meet longer-range financial goals such as retirement," said Greg McBride, CFA, Bankrate.com's senior financial analyst. "Other choices may not do the trick either, as real estate is not only very cash-intensive, but often illiquid. And precious metals spit out zero cash flows, with gains solely dependent on price appreciation."
According to Bankrate.com, the average money-market deposit account yields just 0.11%, so a $10,000 initial investment would only gain $110.55 over a 10-year period. And the average five-year CD currently yields just 0.78%.
The Bankrate.com Financial Security Index is down slightly in July from last month's record, from 102.7 to 102.0. However, this is still the second-highest level on record (dating back to Dec. 2010).
Americans continue to exhibit positive feelings concerning four of the five components of financial security – job security, debt, net worth and overall financial situation – with savings as the laggard.
Net worth continues to improve, mainly due to the housing market, but also somewhat thanks to the stock market. Those reporting higher net worth compared to one year ago (29%) outnumber those reporting lower net worth (16%) by nearly two to one.
The survey was conducted by Princeton Survey Research Associates International (PSRAI) and can be seen in its entirety here:
PSRAI obtained telephone interviews with a nationally representative sample of 1,005 adults living in the continental United States. Interviews were conducted by landline (503) and cell phone (502, including 258 without a landline phone) in English by Princeton Data Source from July 3-7, 2013. Statistical results are weighted to correct known demographic discrepancies. The margin of sampling error for the complete set of weighted data is plus or minus 3.6 percentage points.
About Bankrate, Inc.
Bankrate is a leading publisher, aggregator, and distributor of personal finance content on the Internet. Bankrate provides consumers with proprietary, fully researched, comprehensive, independent and objective personal finance editorial content across multiple vertical categories including mortgages, deposits, insurance, credit cards, and other categories, such as retirement, automobile loans, and taxes. The Bankrate network includes Bankrate.com, our flagship website, and other owned and operated personal finance websites, including CreditCards.com, Interest.com, Bankaholic.com, Mortgage-calc.com, CreditCardGuide.com, Nationwide Card Services, InsuranceQuotes.com, CarInsuranceQuotes.com, InsureMe, Bankrate.com.cn, CreditCards.ca, NetQuote.com, and CD.com. Bankrate aggregates rate information from over 4,800 institutions on more than 300 financial products. With coverage of nearly 600 local markets in all 50 U.S. states, Bankrate generates over 172,000 distinct rate tables capturing on average over three million pieces of information daily. Bankrate develops and provides web services to over 80 co-branded websites with online partners, including some of the most trusted and frequently visited personal finance sites on the Internet such as Yahoo!, AOL, CNBC, and Bloomberg. In addition, Bankrate licenses editorial content to over 500 newspapers on a daily basis including The Wall Street Journal, USA Today, The New York Times, The Los Angeles Times, and The Boston Globe.
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SOURCE Bankrate, Inc.