What is inflation?
I studied this term in good ol’ economics class but I needed to brush up on some of these details. Let’s throw it back.
At its most basic definition, inflation is when the price/ cost of goods and services begin to increase while the purchasing power of a country decreases. Basically things become more expensive while concurrently the value of a your dollar (or loonie 😉) decreases.
There is transitory inflation which is temporary; often times caused by a disruption in supply chain in some way.
Then there is persistent in which the supply chain doesn’t quite catch up with demand and therefore leads to more “permanent” bottle necks in goods and services.
There’s a lot more to it like the demand pull and built in inflation but we’re keeping it simple!
Perhaps covid, although out of our control is most likely a large reason for transitory inflation but my takeaway is this…
The value of a dollar is most representative in its current time. So if our dollar is worth more now, then what is one asset that will protect you against rising prices while still growing the “value” of your dollar? Real estate. It costs more in the future, but it also appreciates!
What’s the best way to hedge against inflation? Buying real estate… 🤫
In multifamily we like to force appreciation on our assets to increase the value of our dollars today AND into the future. Want to find out how? Let's get in touch!