4 ms·
Ideally, so you have a place to live, regardless of the outcomes and influences of inflation et al. Sure, buying real estate is seen as an investment, but it's
by h4waii 4y ago
Ideally, so you have a place to live, regardless of the outcomes and influences of inflation et al.
Sure, buying real estate is seen as an investment, but it's also a spot to live and to keep all stuff to help or hedge your enjoyment of life.
Some people just want to live, debt free, and be left alone.
- vba616 4y agoI am concerned with having a place to live, as distinct from preserving my current home. If I ever have to leave my doomed home with only what I can carry, I'd rather owe as much as possible at that point in time. I think that debt owed to human beings is strictly better than the same amount of equity just vaporized with no possible recourse.
- tjansen 4y agoDuring an inflation your salary is likely going up, and so are all other assets that you own or buy. Let's say you owe 100000 EUR for a 200000 EUR house, pay 2% interest, inflation rate of 10%. Your net worth is 100000 EUR in the first year. If you repay 8000 EUR, the next year you owe 92000+2%*92000=93840 EUR and your net worth is 220000-93840= 126160 EUR. If you repay 4000 EUR and invest 4000 EUR in gold, next year you owe 100000-4000+2%*96000=97920 EUR, your gold is worth 4400 EUR after inflation and your net worth 220000-97920+4400=126480 EUR. Plus you have improved liquidity. If the inflation rate is higher than the interest of your loan, it's often better to invest in inflation-proof assets.