Most assets lose value in the face of inflation but a few (or one) actually thrive. This is a pretty big deal when it comes to maximizing your profit potential, but don’t expect to learn this information from your friendly cable television business show host. They tend to move in lockstep with the Wall Street stocks and bonds industry. Never forget that convincing you to put your money into their chosen assets is a big business. The whole thing seems a bit incestuous to us, but we’re not here to dwell on it. Instead, we’d like to remain positive and show you a way to profit from inflation.
We all know what inflation is, right? It’s that nasty little economic reality that insures a dollar today won’t buy as much as a dollar a year from now. Or ten years from now. The underlying reasons are a currency no longer backed by gold reserves and a succession of economic and political leaders hell bent on spending billions of dollars we don’t have. So we get what we have – a continual upward spiral in the cost of living.
A point to keep in mind here is that the dollars in your pocket and bank account aren’t the only things losing value. So are the stocks and bonds in your portfolio. In fact, any dollar-based asset automatically diminishes in value in the presence of inflation. The question becomes how can we stop this personal financial wasting? Invest in precious metals? While it’s a better choice than Wall Street, it still must be considered a second class investment to our all time favorite – income property.
While the Bible goes to great lengths to counsel us against the concept of being in debt to others, the discussion of the idea shouldn’t necessarily end there. Before we proceed, if you absolutely abhor the idea of debt of ANY kind, read no further. You’re not going to like what you encounter. However, keep in mind that Christian personal finance guru Dave Ramsey has no problem with a family maintaining a mortgage. In fact, he specifically excludes home debt in his plan to get out of debt. Now is not the time to argue how or why but rather to realize that a long-term, fixed-rate mortgage attached to a residential property which you can then rent out is actually a wise investment choice today, since inflation actually reduces the real value of the loan principle, even if you do nothing more than pay interest.
For more specifics on this approach to inflation friendly investing, visit our affiliate website JasonHartman.com.
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