A new period of rapid inflation is making real estate even more important for investors. Just how much is it hitting personal finances? How does real estate give you a major edge over inflation? How can you invest even more profitably in times like these?
High Inflation Is Here
We may not yet officially be in hyperinflation like some third world countries, but we are pretty close if not above it for many individual items.
That includes things like eggs, milk, groceries, lumber, steel and other construction materials, and of course gas. Various forms of taxes are also definitely pushing hyperinflation rates.
In some cases, individual unit prices may rise only by $1. Though if what used to cost $1 is now $2, or what cost $2 is now $3 at the register, that is 30% to 50% inflation.
Inflation & Its Impact On Your Money
In the examples above, that means you are getting 30% less out of your money each month. You are only getting 70 cents worth of value for your dollar compared to 12 to 15 months ago.
Unless your paycheck goes up by 30% to 50%, then it’s like taking a 30% or deeper pay cut. You probably haven’t seen your finances improve that much unless you have been invested in real estate, or invented Zoom or a vaccine.
This inflation activity also means investments like crypto and public stocks have become super expensive and riskier than ever. All with zero downside protection.
How Real Estate Helps
Real estate has historically proven to go up in value faster than general inflation. This is critical to not only keep your finances balanced, but to keep growing your income and wealth ahead of inflation so that you are making real net gains.
In fact, periods of high inflation like this can be even better for those who hold real estate.
How To Do It
If you don’t hold real estate as a pure investment in addition to your own home, it is an important time to start. If you don’t have a solid percentage of your investment portfolio in real estate related assets, this is time to restructure and make the shift quickly.
Investors can also compound these advantages by choosing passive income producing real estate investments, and investing with additional tax protections such as through self-directed IRAs and 401ks.