Personal consumption expenditure prices rose 5.2% in March compared to the same month last year, according to the Federal Reserve. This comes as inflation adjusted wages fell 0.4%. While the Fed has promised more rates hikes throughout 2022, inflation is still rearing its ugly head in the American economy. This leaves most Americans wondering how to protect their wealth as the prices of goods rise and wages may not follow. In times like these, hard assets make the most sense as a wealth preservation vehicle.
Real estate is a perfect example of a hard asset. Not only does real estate usually appreciate over time, it can also provide rental income, helping offset any inflationary pressures on wealth. And, in the event of a recession, real estate is much less likely to lose value than stocks or other paper assets.
Real estate should always be a part of any well-diversified portfolio. More millionaires have been created through real estate investing than any other asset class. Further, according to CNBC, the average net worth of a homeowner in 2019 was $255,000, while renters averaged just $6,300.
If you’re worried about inflation or a potential recession, buying a home may be the best way to protect your wealth. Of course, real estate isn’t the only hard asset that can provide protection from inflation. Gold, for example, is another popular inflation hedge. But real estate has the added benefit of providing a place to live or generate rental income.
The bottom line is that real estate provides a hedge against inflation and can help preserve your wealth during a recession. If you’re worried about either of these things, buying a home is a great way to protect your money.
With mortgage rates still historically low, now is a perfect time to move your money into hard assets like real estate to preserve, and even enhance, your wealth during through the next economic cycle.
If you’re looking to invest in real estate, or for the best property management company in North Texas give us a call at 469-649-7666 today!
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