Real Estate Investing:

A Hedge Against Inflation.

There’s little doubt that inflationary pressures are building going into 2021. With current market manipulations by the FED through Quantitative Easing (Through QE, about 22% of all US Dollars were ‘printed’ in 2020), market bailouts, and the rapidly rising Federal Deficit all point towards inflation rising in the near term. Some claim that the real rates of inflation are much higher than reported through traditional measures like the Consumer Price Index (CPI). I am far from an expert in inflationary pressures – however this immediately brings my mind into what asset classes are the best hedges against rising inflation for my portfolio. For several reasons, Real Estate is one of the best historical asset classes to protect your money from inflation. Simply put – it is because of historical rates of appreciation that match or exceed inflation in addition to the additional rent income that RE Investing produces.

On their own commodities are considered to be a good hedge against inflation. Precious metals like Gold and Silver are popular as they in theory keep up with inflation as they increase in value over time. Real Estate shares this function through consistent appreciation over time. Commodities however do not produce consistent income that real estate produces through rents. Not only does the value of real estate increase over time and will hopefully outpace inflation – but the Rental Income produced will also proportionally rise (in most markets) along with inflation to protect the buying power that a month of rent can produce.

Real Estate remains an important part of a diversified investment portfolio and it may become even more important if inflation continues to rise.

Thoughts?: dustin@bigfootmg.com