Recently, I’ve been thinking a lot about inflation.
Whether I go grocery shopping or to a restaurant,
It’s hard not to notice the incredible difference in the prices compared to just a couple of years ago.
Now, there are definitely some unfortunate consequences of this.
Think about all of the retirees who have worked their entire life to save enough resources for retirement…
Each year, their nest egg is depleted and eroded.
What if there was a way to make inflation work for you?
Rather than taking money from you, what if it gave you money instead?
Wouldn’t that be F&%KING brilliant?
I have some good news for you.
Let’s say you have saved a deposit ready to invest in the market.
Using debt, you could potentially lever that deposit into a property 5x the value of the initial deposit.
(by using an 80% LVR – loan-to-value)
Each year the value of your debt stays constant,
While the value of money is worth less.
Meaning that each year, that debt will decrease in its real value.
To help explain this, let’s say you own a PPOR… say, worth a million dollars.
Well, thanks to the inflation rate in 2022 (around 7%),
That’s an additional $70k that inflation has eroded away from the debt you owe.
So… understanding this concept,
Is… debt… the actual game here?
Well, I’ll be honest here…
Looking at the numbers, it certainly seems that it’s an important component.
Moving forward, this realisation has made me reconsider my investment strategy and how I am using debt and inflation to my advantage.
And, well… luckily for you!
In this week’s podcast episode, Grant and I will be talking more about this and breaking down everything that has to do with inflation!
We’ll be discussing:
– The average inflation rate in Australia
– Whether or not inflation will continue
– As well as how inflation is changing our investment decisions and more!
Tune in now!
PS: Send us an email and share your experiences with inflation, as well as how you’re considering using it to your advantage going forward!
All information we share is NOT financial or investment advice and is purely intended for entertainment and educational purposes only. Always seek professional advice before acting on any financial decision.
00:00 Welcome to Property and Investing
02:32 Average inflation rate in Australia
05:05 The rising cost of goods and services
13:21 Will the inflation rate continue?
23:34 How will inflation affect our investment decisions?
26:55 Investing in real estate amidst inflation
29:20 Buying properties and debt
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