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Are you unfamiliar with the concept of Leverage? Sure, having an investment keep pace with inflation isn't phenomenal, but in the US it's standard to put 20% do
by runT1ME 10y ago
Are you unfamiliar with the concept of Leverage? Sure, having an investment keep pace with inflation isn't phenomenal, but in the US it's standard to put 20% down of the house value. So if inflation is 3%, I can realize 15% on my investment.
- rdmcfee 10y agoExcept your mortgage interest may also be 3% so you may realize nothing on your investment. Your interest costs will be proportional to your leverage so you need the asset to outperform your interest rate to realize anything.
- jly 10y agoYes but this is a home, and not some generic investment. I can either live in the home, saving livings costs (rent), or I can rent it out and generate income, which will pay for the interest on the loan.
- runT1ME 10y agoGood point! I meant for your primary residence, you're paying that interest regardless of if you own a home or rent. So I don't factor that in when it comes to a primary residence. This is a different story for investment properties.
- onedognight 10y agoYour interest rate is likely higher than inflation, so you lose money on loan amount if the home just keeps pace with inflation.