Thursday, May 28, 2009

What Rich People think about Inflation

Maybe you believe inflation is bad but, if you’re me, inflation is a good thing. I make a lot of money from inflation. Hold on! Before you dismiss me as some kind of kook, take a minute and think about what I’m about to tell you.

It won’t take long. Trust me.

I’d like to remove that mistaken fear of inflation that’s been drilled into you since you were young. With my blog you’ll learn how to properly invest in real estate for maximum returns – you’ll take my crazy ideas about inflation and make money too. Lots of money.

Here’s how it works. Let’s use an example to illustrate the concept. This is good stuff.

Say you bought six single-family homes for a grand total of $1 million dollars at ten percent down. That means the balance on your loan is $900,000 the day you close the deal. Let’s further say inflation is 4% and over the next year you pay nothing on the principle, making interest payments only.

At the end of that year, in real terms, your loan just reduced to $864,000. Inflation just paid off $36,000 of your balance while you did nothing but keep breathing!

Do you see how that happens?

You locked in the number $900,000 the day you took out the loan. It will never get any bigger. BUT…inflation reduces the value of that balance at the rate of 4% (or whatever) annually, knocking a chunk off each and every year like clockwork. A dollar a year from now is worth 4% less than a dollar in your pocket right now. That future dollar is only worth ninety-six cents!

In real wealth terms, you just gained four cents on every dollar against the value of the loan your bank holds.

That’s what I call the Great Inflation Payoff.

Read the example passage again if you need to. Think about it. Understand it. That’s how rich people think.

Use inflation to start making great returns with income property investments, history’s best bet. The road to success is shorter than you think.

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