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For generations, the American dream was associated with a porch and a white picket fence, but today it can include an investment portfolio. New data from the Federal Reserve shows that for the first time since World War II, Americans hold more capital in stocks than in real estate. And with stocks accounting for nearly half of household financial assets , the definition of success appears to be changing.
Lou, I'll ask you: is the very definition of success changing, are the rules of the game changing? I think it's just a matter of the path, the paradigm, of how we come to home ownership. I think the dream is being postponed a bit because the real estate market is just heated to the limit, right? And many people were left out because of the prices.
So I like this data because it shows that we are not giving up, but are finding other ways to earn money for our own housing. And to be honest, look at the last two decades: the stock market has been significantly outperforming the housing market . The average annual return on real estate in the 2010s and 2020s is about 5-6%.
Promotions? Over 14%. So I think diversification and owning different assets is a smart move. Real estate is just one of many assets, as you know. So I like this trend and I don't think it's a bad thing. Cheryl, is this a result of people not being able to buy a home and having to invest their money somewhere, or is it a result of people being so successful in capitalizing on the AI boom?
I will choose the first option, option number one. The younger generation cannot enter the market, those who buy for the first time are simply pushed out due to high prices. Not just because of interest rates, but also because of the cost of housing itself. And many baby boomers still don't want to sell their five- bedroom homes because they're either already paid off or have a very low mortgage rate.
This is the first thing. Also, look: prices still need to come down, and until that happens, there won't be any significant changes in the real estate market. But on the other hand, the younger generation says, "You know what? I'm okay with not buying a home. I can live with my parents a little longer ." Which is completely unlike what we are all used to.
You convinced me until it came to " living with my parents a little longer." No. I mean, these are the ... I look at 28- year-olds who say, " Yeah, I'll live with mom and dad. It's cheaper." But if you look, this is Federal Reserve data. Hurry up, Marcus. US households hold almost half of their financial assets in stocks in the 3 months to June.
If you go back to the 80s, it's a complete reversal of what we saw in the early 1980s. In the 80s, our parents could buy a house and double or triple its value. At current prices, this is simply impossible. And I would add that after the pandemic and this inflation, which is the last real inflation we've seen, essentially, since the late 70s, people have been encouraged to say, " If I put money on deposit, inflation will devalue it." So it doesn't matter if I can buy a house.
I need to invest in the stock market." They were looking for yield. Do you want your house to go down so that other people can buy it cheaper? No. We want our house to go up. But I'll just add one thing. Think about it, a lot of kids have opened trust accounts. So that's where they're headed. So if that's what happens, it's going to benefit them, because these are kids who were born this year or last year.
How can you not be optimistic about this market, given all this new capital coming in? And the pandemic prepared everyone. It was a time when people started downloading these apps, trading from their phones, and realizing that they could make money remotely, and that's what they needed to do to build their future.
But sometimes what goes up comes down. Yeah. And, you know, a lot of these stock memes that you talk about, I think of Roaring Kitty and all this gamification. I'm talking about market overall profitability. I'm not saying it wo n't go down, but they've had some good growth. And if you look at that , people are like, "Wow, that was good for me." Yeah, the trend with the younger generation.
The trend that scares me about the younger generation is how much they're using prediction markets as an investment. We have a lot of scary data. Prediction markets are not investments. You're not buying ownership in something. Stick to the stock market. I don't want my house to lose value. I don't think anyone wants that, but I worry about it.
Now, on another topic: Leaving your kids a fortune sounds like a dream, but some wealthy parents worry that it will discourage them from working. A new study found that more than 60% of ultra-wealthy parents worry that an inheritance will kill their children's drive or desire to work, and they're trying to fix that.
From hiding the size of their family's wealth to putting rules in place Trust funds -- parents trying to protect their children's work ethic. Is this up to me? So we have Randy Quaid in the story. Marcus, I thought, " Give your kids all your money." I'm... I'm trying, and I'm definitely not going to give your kids all my money.
But, uh, yeah, I've been trying... What are you doing? I'll get to that in a moment . I've been trying to imagine what these offspring look like. And the first thing that comes to mind is Spaulding Smiles from The Golf Club, walking down the course and saying, "I want a cheeseburger. I want a hot dog." And Judge Smiles says, " You're not getting anything , and you're going to like it." A little old-fashioned tough love goes a long way .
And you know who supports that? Warren Buffett. Warren Buffett's famous rule is, "Give your kids enough so that they feel empowered to do anything in their lives, but don't give them so much that they can literally do nothing." Shaquille O'Neal thinks the same way. He seems to require his kids to get two degrees before he'll give them access to money for their own businesses.
He says, "No, this is my money. I earned it. It's not your money." Steve Jobs did the same thing. Bill Gates did something very similar. What about Jeff Bezos? What did he do? Listen, the most important thing I can say is that hardship builds character, right? There's this saying: Tough times make strong people, tough people make good times, good times make weak people, and weak people make tough times.
How do you prevent that from happening ? Look, you have to instill a work ethic and be creative , and I'm not one of those people who thinks you should just give them everything . through a trust fund, and I've seen it firsthand . In my personal experience with many people I know, kids lose motivation because they know they have this " airbag." When you don't have " airbags, you go out and understands what hard work is.
I mean, that's what it was all about , at least for our generation. We were kids. We thought, here we go to college at 18. We'll be out of the house at 22. Bye , Mom and Dad. enjoyed the days when it snowed. This might be the first time you and I disagree. I think young people today work really hard.
They just do it differently. a little bit, there's no " airbag" to pay my rent. And then people will do what they need to do. Okay. So, Griff, thanks for telling us where your kids are in your life. Listen, I'll remind them that their inheritance has already been spent on their three-day DoorDash orders.
Watch Griff every Saturday and Sunday from 6:00 to 10:00 AM ET on Fox and Friends Weekend. Don't forget to like and Subscribe to the latest Fox Business news on YouTube. And full episodes of the show are now available to stream on Fox 1.
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