Understanding inflation is an essential part of deciding how to invest money. Inflation is an annoying reality that means your money is simply not as much as it looks on paper. Never. Even during periods of low inflation, it can have a detrimental effect on your balance, but in times of high inflation can be devastating.
“Those 30 thousand that you earned in your work ten years ago and with which you lived comfortably hardly serve to sustain you today,” Entrepenur.com wrote. “You can not control inflation (the Bank of Mexico takes care of that) and the government has kept it growing in recent years.”
While money may not be the key to happiness, it is certainly hard to be happy if you do not have enough. If you are looking for the best ways to invest money and you are worried about having all your money in the stock market – and you should be – but you do not want to settle for the almost zero ROI offered by banks, consider the following eight Reasons why you should invest in lucrative real estate with results you notice.
- Generate a positive monetary flow
As one of the biggest benefits of investing in income producing real estate, a cash flow is secured by rents, which also make this a more conservative investment than traditional stocks and mutual funds. Investors enjoy a regular income stream that is significantly higher than regular stock dividends.
- Use Advantages to Multiply Your Assets
Investing in real estate also offer you the ability to place your debt in the asset, often the original equity. This means you can buy more assets with less money and start multiplying the value of your assets while the loans are being paid.
- Low-cost debt can be used to your advantage to multiply the flow of money
By placing a “positive lever” in real estate investing, investors can increase the overall positive cash flow from operations by borrowing money at a lower rate than the property gives you assets. Here’s how it works: When a property generates a cash return of 6 percent and is only 4 percent, investors are paid 6 percent on an equitable share and about 2 percent on the money that is Borrowed – also known as lever.
- Provides coverage for inflation
In economics, for every dollar that is created there is a corresponding debt, but the investment in real estate has – over time – proved to have a very strong ability to challenge inflation compared to other classes of assets. As countries around the world continue to print more money as a way to stimulate growth, it will be essential for investors to protect themselves from inflation. Real estate is an excellent way to do that, because its price (value) usually rises along with inflation, and sometimes surpasses it.
- Physical assets have value
Smart investors capitalize on physical assets, and income producing real estate is a strong asset with real value. And not only the structure has value, but in many cases also the terrain itself. In addition, it is important to note that investments in real estate that produce income do not always have red and green days, such as the stock market.