Inflation is silently stealing your money!!!
How inflation is stealing your money!
Did you know over time the purchasing power of your dollar is less and less?
Don’t believe me?
Check this out…
34 years ago today (I would be a baby crawling around btw) gas for a car at the time cost .90/gallon. No, that’s not a typo, the national average for (1) gallon of gas was .90 cents!
How much do you pay today to gas up your vehicle? I bet it is a lot more than .90/gallon!
How about a cup of coffee? In 1987 a single cup of coffee cost $1.29 today the national average for a cup of coffee is $3.77.
Still don’t believe me? My favorite T-shirt in 1987 cost me $35 fast forward today it now costs me $38.01.
Do you see a trend? Goods and services are more expensive today than they were yesterday or what $100 bought 34 years ago does not buy the same amount today.
Why is this thou? Inflation.
The easiest way to think about inflation is … the decrease in purchasing power of your money over time.
So what do you think is happening as a result of the federal government injecting over $3T dollars into the U.S economy last year in 2020? You guessed it, inflation. By doing this, the federal government created so much money in such a short time. Obviously at the time this was done to help keep the market from “crashing” or at least that’s the way it was sold. But this is what it really did…. 1 out of ever 5 dollars floating around in circulation today was printed in 2020. By doing this, the value of your dollar your hard earned money goes down. Just think if there is so much supply of money is their more of a demand for it or does it go down in demand? What then goes up in demand?
Well… my answer would be this: real assets!
Real assets (like real estate) will always beat and be a hedge against inflation. The real estate we buy (multi-family apartment buildings) has barriers to entry. This in itself naturally creates demand for it. In real estate when inflation occurs in the economy rents naturally rise to adjust for inflation. Rents going up = the value of the property increasing. Which is my next point, during times of inflation assets appreciate in value. But inflation actually benefits real estate investors. The third thing is during inflation the existing debt is cheaper. I don’t want to loose you on this. But what you need to understand is your money is being robbed of its purchasing power sitting in the bank or not being invested. You need to take your earned money and invest it (all of it) into real assets. That is the only way you will be able to overcome inflation.
I'll leave you with this.... it's a really cool graph that breakdown the devaluation of $1 over time.
The best investment on earth is earth!
~ Sean