This article adheres to strict editorial standards. Some or all links may be monetized.
The U.S. stock market has surged to new highs recently — good news for investors, at least on the surface. But with Americans now holding more of their wealth in stocks than ever before, some economists warn that what comes next may be far less rosy.
John Higgins, chief markets economist at Capital Economics, says Americans’ stock ownership has even surpassed the levels seen in the late 1990s — right before the dot-com boom went bust. (1)
“That should ring alarm bells, even if the buoyant stock market keeps rising for a while amid enthusiasm for AI,” Higgins wrote in a note to clients, adding that “the current very high share of equities is a red flag to watch closely,” CNN reported.
According to Federal Reserve data cited by CNN, 45% of Americans’ household financial assets are now in stocks — an all-time high. That includes direct shareholdings as well as mutual funds and retirement accounts.
Must Read
Even with periodic sell-offs — such as the sharp plunge in 2020 when the pandemic hit — the broader trend has been a powerful climb. Over the past decade, the S&P 500 has returned more than 251%, (2) while the tech-heavy Nasdaq Composite has soared about 375%. (3)
Still, Rob Anderson, U.S. sector strategist at Ned Davis Research, points out that record levels of stock ownership have historically coincided with increased risk of a downturn.
“Investors shouldn’t expect the same magnitude of returns that we’ve seen during the last decade to repeat. Going forward, over the next 10 years, there’s probably going to be a downshift in returns,” Anderson cautioned.
And economists aren’t the only ones worried. A recent Bank of America survey found that 91% of fund managers believe U.S. stocks are overvalued — the highest reading in data going back to 2001. (4)
Even veteran investors are taking cover. Legendary investor Jim Rogers recently revealed that he’s sold all his U.S. stocks, warning he’s “seen this party before.”
If you’re concerned about where markets might head, here are four ways to help protect your wealth.
A golden hedge for ‘bad times’
When investors start worrying about dark clouds over the market or slowing returns, gold often shines brightest.
The precious metal’s appeal is simple: Unlike paper money, gold can’t be printed at will by central banks. And because its value isn’t tied to any one country, currency or economy, it’s long been viewed as a safe haven — especially when markets lose their footing.
Ray Dalio, founder of the world’s largest hedge fund, Bridgewater Associates, recently highlighted gold’s importance in a resilient portfolio.
“People don’t have, typically, an adequate amount of gold in their portfolio,” Dalio told CNBC. “When bad times come, gold is a very effective diversifier.”
History backs him up. During the financial crisis that began in 2008, gold prices surged nearly 25% as global stocks tumbled.
One way to invest in gold that also provides significant tax advantages is to open a gold IRA with the help of Thor Metals.
Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, thereby combining the tax advantages of an IRA with the protective benefits of investing in gold, making it an option for those looking to help shield their retirement funds against economic uncertainties.
Plus, when you make a qualifying purchase with Thor Metals, you can receive up to $20,000 in precious metals for free.
Read more: US car insurance costs have surged 50% from 2020 to 2024 — this simple 2-minute check could put hundreds back in your pocket
Passive income, even in a down market
Like stocks, real estate has its cycles, but it doesn’t rely on a booming market to generate returns.
Even in a downturn, high-quality, essential real estate can continue to produce passive income through rent. In other words, you don’t have to wait for prices to rise to see a payoff — the asset itself can work for you.
In fact, Warren Buffett has often pointed to real estate as a prime example of a productive, income-generating asset.
In 2022, Buffett stated that if you offered him “1% of all the apartment houses in the country” for $25 billion, he would “write you a check.” (5)
Of course, you don’t need billions — or even to buy an entire property — to benefit from real estate investing. Crowdfunding platforms like Arrived offer an easier way to get exposure to this income-generating asset class.
Backed by world class investors like Jeff Bezos, Arrived allows you to invest in shares of rental homes with as little as $100, all without the hassle of mowing lawns, fixing leaky faucets or handling difficult tenants.
The process is simple: browse a curated selection of homes that have been vetted for their appreciation and income potential. Once you find a property you like, select the number of shares you’d like to purchase and then sit back as you start receiving any positive rental income distributions from your investment.
Another option is First National Realty Partners (FNRP), which allows accredited investors to diversify their portfolio through grocery-anchored commercial properties without taking on the responsibilities of being a landlord.
With a minimum investment of $50,000, investors can own a share of properties leased by national brands like Whole Foods, Kroger and Walmart, which provide essential goods to their communities. Thanks to Triple Net (NNN) leases, accredited investors are able to invest in these properties without worrying about tenant costs cutting into their potential returns.
Simply answer a few questions — including how much you would like to invest — to start browsing their full list of available properties.
A finer alternative
It’s easy to see why great works of art tend to appreciate over time. Supply is limited and many famous pieces have already been snatched up by museums and collectors. Art also has a low correlation with stocks and bonds, which helps with diversification. (5)
In 2022, a collection of art owned by the late Microsoft co-founder Paul Allen sold for $1.5 billion at Christie’s New York, making it the most valuable collection in auction history. (6)
Investing in art was traditionally a privilege reserved for the ultra-wealthy.
Now, that’s changed with Masterworks — a platform for investing in shares of blue-chip artwork by renowned artists, including Pablo Picasso, Jean-Michel Basquiat and Banksy. It’s easy to use and with 23 successful exits to date, every one of them has been profitable thus far.
Simply browse their impressive portfolio of paintings and choose how many shares you’d like to buy. Masterworks will handle all the details, making high-end art investments both accessible and effortless.
Masterworks has distributed roughly $61 million back to investors. New offerings have sold out in minutes, but you can skip their waitlist here.
Consult a professional
At the end of the day, everyone’s financial situation is different — from income levels and investment goals to debt obligations and risk tolerance — which means the best move for someone else might not be the best one for you.
If you’re unsure where to start, it might be the right time to get in touch with a financial advisor through Advisor.com.
Advisor.com is an online platform that matches you with vetted financial advisors suited to your unique needs. They can help tailor a strategy to your unique financial situation, whether you’re looking to grow wealth, diversify beyond stocks or plan for long-term financial security.
Once you’re matched with an advisor, you can book a free consultation with no obligation to hire.
What to read next
Join 200,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
CNN (1); S&P Global (2); Google Finance – Nasdaq Composite (3); Bloomberg (4); CNBC (5); Christie’s (6)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.