The Real Estate Market has seen both sides of the coin.
Investments that have seen 2-3x growth, and Investments that turned out to be scams.
But then does this mean the asset class is bad?
Absolutely not.
More importantly, it’s moving to be a necessity to have a hard asset in your portfolio.
Why?
Case Study 1
Let’s take the case study of Argentina.
The Inflation in Argentina is upwards of 100%.
Since 2005, the inflation has been steadily going up.
This ultimately leads to a need to inflation-proof your investments.
This situation of increasing inflation is playing out in India as well.
In India:
- The Debt is increasing
- Debt/GDP is somewhat stable
- Productive debt is however reducing
This ultimately means that the debt that is taken is not spent productively.
This will lead to:
- More Indirect taxations
- Increasing inflation
- More regulations on the middle class
In India, the official inflation may only be 5-6%.
But the actual number is way higher for a normal middle-class person.
And the first step to take to start inflation-proofing your investments is to control your living situation.
- Own a house
- Own a land where you can build a house
Case Study 2
This is the global debt chart:
In 1970, Debt-GDP was at 100%.
That is the Debt= Income
In 2022, Debt-GDP is at over 250%.
Debt= 2.5 x Income
Post 2020,
The US printed 20% of its existing money supply i.e: 100 units in 2020 became 120 units in 2021.
Hard Assets are your hedge against such a macroeconomic downtrend.
- Real Estate
- Gold
- Bitcoin
Hard Assets will go up over the long term.
How will the government repay their debt?
- More Money Printing
- Increased Taxes
- Removed Benefits (eg: Indexation Benefits removed)
This will lead to Fixed Supply Assets going up in value.
Now what type of Real Estate to buy?
That’s a whole different concept that we will cover in the coming newsletters.
Source
- Akshat Shrivastava 30 days Newsletter.
