What are you doing to fight inflation?
As we all know, inflation has been crazy-high this past year and will continue to be overheated for a while.
We know the Feds are working to bring inflation down, but what are YOU doing to protect yourself?
In Economics, we learn that in an inflationary cycle, we want to hold ASSETS, not cash. Even better: Leveraged Assets … like real estate. (Leveraged means you bought it with a loan and it’s good to have debt during inflation, because the funny-money bucks you use to pay back the loan are less valuable in the future.)
Example: Rents usually go up at a rate higher than inflation, so if you’re renting, we can assume your rent has gone up and will continue to do so.
Now look at your parents’ mortgage payment.
My parents bought their Seattle-area house for around $40K (back in the day). You can see how you’d be feeling better 30 years from now, paying back a mortgage on a $40K loan, than paying the rent rates at that point in time.
The play right now is to be buying real estate in today’s (softer priced) market and watching the property value rise again as demand increases and prices go up in the future.
What other choices do you have to protect against inflation?
Instead of just letting your money sit in your bank account, making little to no return, we can look at investments in the stock market: buying stocks as they are still low, and then letting them grow in value as the equity markets recover.
The most important thing is just to actively have a plan to fight/hedge against inflation.
Real estate can be more than just a place to call home. It can be a smart investment as well. I have continued to buy property and equities throughout the ups and downs of the market, and would be happy to discuss your strategy to help you do the same, whether locally or out of state.
