Building Wealth |
Why Real Estate?
To understand the importance of real estate in building wealth, you must first understand a few things about money. The U.S. dollar, like other fiat currencies, is just a piece of paper. As the U.S. Treasury prints more money each year, the dollar continues to lose purchasing power as more and more dollars chase fewer goods and services. This loss in purchasing power is called inflation. This is typically is seen as a negative by those who are most affected by the cost of every-day expenses. As ordinary purchases (think gas, clothes, groceries, rent) become more expensive for the average American, this loss in purchasing power results in a loss in real wealth.
Renters are especially affected by inflation, as rents typically rise faster than real estate prices. Homeowners, on the other hand, benefit from inflation if they have a mortgage on their home. They have the opportunity to lock in their mortgage payment at a fixed rate and pay their loan back over time with a devalued currency. Their mortgage payment actually becomes less expensive each and every year relative to market rents and future home prices.
Entrepreneur and business icon Andrew Carnegie said it best when he noted that "90% of all millionaires become so through owning real estate."
Why is this? First, real estate ownership is a proven concept and accessible to the majority of the population. Real estate is everywhere, and it's tangible. Stocks, bonds, mutual funds and cryptocurrencies are all intangible assets in that they do not exist as physical objects. Real estate, on the other hand, is just that -- it's REAL!!
Renters are especially affected by inflation, as rents typically rise faster than real estate prices. Homeowners, on the other hand, benefit from inflation if they have a mortgage on their home. They have the opportunity to lock in their mortgage payment at a fixed rate and pay their loan back over time with a devalued currency. Their mortgage payment actually becomes less expensive each and every year relative to market rents and future home prices.
Entrepreneur and business icon Andrew Carnegie said it best when he noted that "90% of all millionaires become so through owning real estate."
Why is this? First, real estate ownership is a proven concept and accessible to the majority of the population. Real estate is everywhere, and it's tangible. Stocks, bonds, mutual funds and cryptocurrencies are all intangible assets in that they do not exist as physical objects. Real estate, on the other hand, is just that -- it's REAL!!