The key is to understand what inflation is. The definition of inflation that economists use is “too much money chasing too few goods.” If you break this down, you will notice two parts. There is the quantity money part and the goods part. The word “goods” means anything that you purchase with money, which could be things, services, expertise etc. Notice that there is a relationship between the money and the goods. This relationship is governed by supply and demand, but an easy way to think of it is that there has to be a balance between the two things in order to have the value of goods remain stable.How can too much money come to pass? The question that comes from this is: How does money get created? Today’s money is called fiat money. Fiat means “by decree” or “by law”. When you see the words used “by law”; this can be interpreted as “by force”. Since laws are enforced by the police or the military which literally means they will cause you harm if the laws are not followed. Think of the mafia but legal. This means that we don’t have any choice with respect to the money we are using if we want to follow the law. By definition, other forms of money cannot be used for transactions or purchase of goods. Try using gold or silver coins or cryptocurrencies to pay taxes in Canada. Only Canadian dollars can be used. The other key term to remember is that today’s money is a debt unit. When you hear the word debt, it means someone is owed the money that has been created, as in a loan. There is interest tied to that loan, similar to all other forms of debt. Since the interest is on a country’s currency, the interest is borne by the country – which means the taxpayers of the country. This is where the income tax system comes in. Have you noticed in the last 2 years how much extra money has been “created” around the world? Is there a limit to how much money can be created? There is not, and this is why too much money can be created rather easily and without much oversight.What about the goods? Due to the government response to the pandemic, people cannot produce the goods that they used to produce because they are forced to stay home or close their businesses. The workers are also paid to stay home instead of producing. You can add reduced demand from people not being able to shop and the amount of goods being produced will continue to shrink. Recently, there are shortages of parts and shipping delays. Due to the just in time headache that is logistics today, any tiny disruption will create a ripple effect that will compound exponentially the time lag of getting goods produced. The more complex the product and the more reliant it is on logistics, the longer the delays and the larger the disruption.What you are witnessing now is both forces coming together at once – too much money and too few goods. Is this going to last? Given that the governments are going to create more debt to pay off the old debt, this creates an exponential effect that will approach an unlimited amount of money being created. This also means that the current fiat currency will become more worthless and may be abandoned. The inflation will last until the form of money is changed to something scarce and finite, and the goods produced are stabilized. The two parts of the equation would then into balance again. To counteract the forces of inflation, this means less monetary or debt creation combined with more goods being produced.
The Different Categories of Real Estate Investments to Capitalize On
From statistics, at least 673,000 houses were sold this year alone. That is a lot of property changing in ownership. Therefore, without a doubt, the real estate sector makes a great place to invest. Are you considering becoming a venture capitalist and specialize in real estate investor? If yes, you are making a smart choice. Listed below are some of the types of real estate investments you can make to capitalize on your returns on real estate investments.
Even when you are new to the domain, of course purchasing new real estate property has to be on top of your investment list. Investing in a real estate property is brilliant approach to getting a return. Nevertheless, don’t get started before you actually understand the budget you are going to work with. Having a budget will help you to figure out which sort of real estate investment you can delve into comfortably. You have numerous different types of properties to choose from and buy. Undeveloped land appreciates in time and would be an opportunity to retain one until the value shoots up. Alternatively, you can acquire a single-family home rent it out as you wait to resell it.
Are you already a property owner but considering to upgrade the existing property you have? Renovating your existing property can be a great investment opportunity considering that you can make money from the resale price as the value increases. That is because adding some fresh paint to the exterior and interior of house or any other property improves its resell price. A commercial painting firm can improve the color and curb appeal of your investment properties as professionals know what colors are suitable to improve the curb appeal and resell value.
If you are looking at property investment, ensure that you have an idea about the kind of real estate investment property you want to take up. Consider venturing in commercial property investments as it makes a great venture. This category of property typically consists workplace spaces and buildings. These properties can be utilized to yield rental income without surrendering ownership of the property. So think through the idea of raising, or buying commercial office space, which can be office rentals.
Another kind of real estate investment worth considering is residential properties. You can purchase or build condominiums, single-family homes or vacation homes to use it as a rental income source. Owning residential investment property is ideal for continuing income, but good as well when speaking of resale value. Just be attentive to the market forces and decide to sell when the forces are in your favor. As you wait, you can consider short-term or long-term renting to ensure your property is generating income for you.