How to Invest in Real Estate During Inflation
The money supply rocketed 41% from January 2020 to January 2022. COVID-19 related stimulus and a decade of low interest rates pumped trillions of dollars into the economy. That's a lot of dollars chasing after the same amount of resources.
When the amount of money goes up and the amount of resources and products doesn't, demand for everything increases and you get price inflation. More people rush out to buy houses with low-rate loans. More businesses take on debt to invest in new projects. Add in supply chain problems and you get an 8.5% increase in the Consumer Price Index (CPI) over the last twelve months.
Inflation can eat away at your returns. . If you buy a stock and it goes up 10% but the value of your money has fallen 8.5%, your real gain is only 1.5%. That doesn't mean you should sit on the sidelines, however, buying stocks and holding them for the long-term is your best bet to beat inflation and keep your purchasing power up.
Source Fool.com
