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Before You Empty Your Cash Deposit for Investment to fight Inflation...

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WJK

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Home owners are in the driver seat right now.. the only question is.. would you rather have some that equity as liquid cash to maybe diversify... or do you just want to enjoy the rental income? I can't remember rent prices ever going down
They have. And I have reduced rents at times over the years.
 
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Kevin88660

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Long term - stocks are better than cash. You are essentially buying a business. That business will sell goods or services priced in inflated dollars. Meaning their nominal profits and revenue will increase, thus increasing their stock value that is also priced in inflated dollars.

There is 0 chance that there is not high inflation. Yes, consumer goods and food may not see price increases due to their massive supply and technological advancements. However, housing has not increased in supply and is staying artificially low due to obscure govt policies. Discretionary spending on things like vacations and entertainment will skyrocket due to 0 increase in supply and pent up demand for the past year. If every human is dying to attend a sporting event or concert and the arena only fits 30,000 people, what happens to the price? Thats where you will see the most rampant price increases. Season tickets and real estate in vacation hubs may be solid investments if you have extra money lying around to invest with
Over the long term inflation is a sure thing. Asset price and goodwill increase over time.

But when most people talk about inflation they dont mean stockpiling goods so that they dont have to buy later. They are taking about asset prices.

A lot of invetsment guru are hyping investment as a one way bet. “Because of inflation you can’t lose money in investment...”

The issue is asset prices can be subject to heavy deflationary forces

1) Most of the fiat currency today are not printed out to buy stuff. They are issued out as debt through the banking system.

So when money is minted an equal or slightly more amount of liability is created as well.

when a business borrows and spends on equipment the money has to come back, together with interest spending on buying the goods and service provided so that it can pay back the bank.

2) QE is bullish when asset price is at bottom for sure. But when the Fed balance sheet is huge (through buying assets), the entire stock market becomes a penny stock controlled by Fed. When it actually wants to unload part of the stocks, market will tank.

The issue is most money that is brought into the system has strings attached to them, that can be pulled back. They are not money that has been printed and couldn’t be taken back.

The only sure inflationary money that I see is the stimulus bill package. Truly no strong attached money released into the system. Retail money could use it buy meme stocks. Very interestingly we are seeing Nasdaq capitulation while GME price remains strong.
 

garyfritz

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Sounds like maybe you should sell the paid off homes and 1031 into something bigger, especially at the low rates we have now that likely will go up.

Or, cash out refinance 1 or both of the paid off ones.
I may 1031 the condo into a 3-4 BR home. Or I may sell one of the others -- the current renters have expressed interest in buying, if they can qualify.

I already did a cash-out refi on my home. :) Figured I could do a lot better than 3% with that cash...
 

WJK

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I may 1031 the condo into a 3-4 BR home. Or I may sell one of the others -- the current renters have expressed interest in buying, if they can qualify.

I already did a cash-out refi on my home. :) Figured I could do a lot better than 3% with that cash...
Make the house a basic one. They rent better and they are easier to turn around when you have a vacancy.
 

thechosen1

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That's the big fear, banking too heavily on one or the other.

Debt up to your eyeballs? Deflation will destroy you. (Or basic things like job loss, business revenue drying up, etc)

All cash? Hello, inflation.
Heck, if you're renting, inflation is destroying you. If you work a normal job, inflation is destroying you.
 
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Kelvin Fernandez

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Inflation? Naw...

But hey, you can at least buy a Dodge truck for just under $100,000.


My eyes.... That thing is hideous.
Yup, that's my first thought. Then I saw the picture of the inside and it had an entire space station control panel in there. I just want a truck that can handle heavy loads. No fancy mumbo jumbo, Artificial Intelligence stuff that will need software updates and new sensors every week.
 

socaldude

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10 year bond up 5.39% to 1.730. In other words bond investors DON’T believe the Fed about inflation. Money talks. Same thing happened in 2010.
 

thechosen1

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10 year bond up 5.39% to 1.730. In other words bond investors DON’T believe the Fed about inflation. Money talks. Same thing happened in 2010.
This reminds me of Stossel's election betting odds...

The official report says one thing, but all of the people may or may not believe the official report. Often with good reason.
 

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