Inflation is affecting the prices of everything from groceries to cars to houses. But one thing that’s protected from inflation, and something you may actually benefit from it, is the home you already own. Find out why in Russell’s latest video.
Transcript:
Hi, I'm Russell Rivera, founder and president of Voice Wealth Management. And welcome back to our instant vlog series. For those of you who don't remember, she was basically me walking and talking to you about some ideas that were on my head around financials and financial markets and economy and how it affects your financial situation.
So, the key word these days has really been about inflation, right? People talking about how prices have gone up so fast, headline, inflation, hearing 9% how, you know, food prices, and a lot of things we use every day are really much more nearly twice that, you know, how people's barbecues are costing 17%, more than last year.
And while that's important, you also have the financial markets down a bunch, too. So for most of us, you know, for many people who have had savings, financial assets, you know, with stocks down and bonds down as much as they are, many people are 20 to 25% poorer than they were over a year ago. It's really a bad spot to be in, obviously, if you are not, you know, don't have positive cash flow for earning and you're retired. It's much worse, obviously. But from the perspective of, you know, just just being around, it's not a positive situation.
But what it actually made me think about is, it's really important, if you're getting started, and you're in this kind of environment. And obviously now it's kind of too late, but that you actually own your own home. Right, because inflation, helps debtors, it helps people who have debt, and most people who own their own home, have mortgages. That's a big amount of debt. And why is that positive? Well, if rents are going up as much as they have, certainly around Manhattan, and around the rest of the country. Well, what does that mean? Of course, I'm out here, and now it started raining. But when you own a home, and you only have your own mortgage, right, not only do you have the opportunity for the price of your opportunity for the price of your home to appreciate, which it usually does, and it has in times of inflation, but your monthly payment is fixed. If you've got a fixed rate mortgage, right, so imagine, let's assume the price of everything else goes up. And let's say your salary and your earnings are able to keep up well, or at least somewhat keep the share of the money that you're putting to a Towson goes down, which means you have more money to keep up with other things such as increasing food costs, or maybe even savings. So we just have to, you know, it's one of those things that has kind of fallen by the wayside. And it's, it's in some ways, being actively pushed against.
But it makes sense if you're younger, and you don't yet own your home, that you know, for the rest of your life, regardless of what's going on. It makes sense to really save for a down payment and try to make sure you get to a point where you can own your own home. And I think in a time of inflation, that becomes obvious. Now more than ever, so that you can keep your housing costs fixed, as opposed to increasing as quickly as rent prices have been increasing, So thanks for watching, and we'll see you next time and see you soon. Bye for now.
Russell D. Rivera, CFA, CFP® is the Founder and President of Voice Wealth Management (Voice) in New York, NY. He also likes to think of himself as a Personal CFO and Financial “Therapist” for entrepreneurs, young professionals, and their families. He helps clients make prudent financial decisions regarding spending, saving, investing, and planning while giving a voice to the individual client's financial priorities and experiences.