Inflation is on the rise. How do you beat it?

What is inflation?

Inflation can be observed in two things over time: First, in the increase of the prices of goods and services. Second, in the decrease of the purchasing power of money. 

To better illustrate inflation, let us take a cup of coffee for example. In 1970, a cup of coffee cost $0.25. As years passed, its price has increased and today a cup of coffee costs $1.59. A good becoming costly over time demonstrates inflation. If you had $2.00 in 1970, you could buy eight cups of coffee. Year after year, the value of money declines and today, the same amount of money can only buy you one cup of coffee. When money buys you less goods over time, that is inflation. 

Now you’re thinking…

Is inflation a bad thing or a good thing?

SOURCE: U.S. Bureau of Labor Statistics 

There is no stopping inflation – it is on the rise. To give you the exact numbers, the inflation rate for April of last year was 0.3% and this year it is at 4.2%. In other words, the inflation in the US is soaring. It is picking up substantially, and what does this mean? 

Two things: 

If you’re a saver, inflation is your enemy, since your money will be worth less as time passes by. Hence, stuffing your cash under your mattress is a bad idea. Even if you deposit your savings in the bank, inflation still lessens the value of the interest you gain. 

If you’re an investor, you may lose or gain from inflation depending on what type of asset you invest in. If you invest in bonds, inflation will hurt you as it will erode the value of your holding. If you invest in stocked commodities or properties, you will profit from it as inflation increases the value of these assets.  

Then…

How do you gain from inflation? 

The answer: through investing. 

If you don’t invest your money, its value will drop over time as inflation occurs every single year. Hence, you have to invest it. But you also have to be smart in what asset you invest in because not all investments are inflation-proof assets. 

 

What is the ultimate inflation-proof investment?

Two words: real estate. 

Investing in an inflation-proof asset such as real estate is a way to profit from inflation. 

As I have mentioned a while ago, property value increases during inflation. With the housing market on fire, prices are going up and up and up. As a result, fewer and fewer people can afford to buy those houses and they are forced to rent. Hence, the rental rate in the residential market soars. If you look at the commercial market, similar thing happens. Many commercial properties gain from inflation as they are able to charge high rents as well. From self-storage to industrial, the rent surges up. 

Do the math – as the rent increases, so do the revenues. 

 

Beat inflation by investing with us

The only way to beat inflation is to stay ahead of it. 

We have a family of funds that invest in real estate ranging from residential, commercial to industrial properties that are income and growth focused. In other words, these are property investments that stand to gain from the rising inflation. 

If you want to know more on how to benefit from inflation with real estate investments, do not hesitate to reach out. 

Email Alina at Alina@TempoFunding.com

We can’t wait to hear from you. 

Thank you for your time. 

Mike