In what asset class should I invest?

Should I place my money in stocks? Gold and Silver? Or Real Estate?And How about inflation?

Let get right into it:

Forget stocks, unless you are truly not in a hurry to make money this life time. I say that, simply because, in the stock market youcannot control anything and you need a long period of time to see good results. All you can do, is buy into one of the large indices,(like the S&P 500) and keep investing in it,in small increments, over time, this is called “dollar cost averaging”.

You should eventually see some good results over a few decades because inflation alone will increase the trading price of the stocks and the value of the companies that are in the index. This is even what Warren Buffett has recommended to his heirs.

Gold and Silver do not produce any income, so they are mostly used for people to park some or all their money mainly to adjust to inflation but not for income. I doubt that is your only end goal.

All roads lead me real estate. More specifically: Buying and holding mix use, income producing commercial properties,that are well located, in large growing cities around the United States, preferably in warmer climate locations.

But how about inflation? There is a lot money being printed by the government. Doesn’t that devaluate the currency over time? And how does this affect future real estate values?

Printing money and creating inflationary pressures actually works out very well for commercial real estate investing in the US for several reasons:

1) The bank loan and leverage you get to acquire the commercial property helps you first of all buy a bigger building, so your money controls a larger asset that over time could increase in value and return a higher multiple on your money

2) The renters/tenants are the ones paying down your debt over time while also providing you with income against the down payment that you have placed

3) Because there is inflation, as the government prints more money and places it in circulation, over time, you not only reduce the amount of money you owe, but also the value of the dollars you borrowed. You see, inflation and reducing the purchase power of the dollar is an inherent part of the economic structure of the United States. We borrow from foreign countries like China and must reduce the dollar’s purchase power through inflation to pay off the debt with less valuable currency. It works well for the debtor and horribly bad for the creditors on a macro level between governments.

And, it also works very well on a micro level for individuals and real state funds.

So, as a debtor of an income producing property, you will borrow a dollar today and end up paying it off over time at a reduced value of maybe 50 cents or even less.

4) Inflation also helps increase the replacement cost of the property you own, because the cost of material and labor constantly goes up in price to meet the pressures of the devaluation of the dollar. So your building double or triples in value over time.

5) Inflation causes the rental income to increase over time. The tenants pay more for rent, and they pass on the cost to consumers who buy their products. This also increases the value of your property over time.

6) Taxes get reduced because of all the benefits offered from owing real estate. Depreciation, write off of expenses, interest payments etc.,

7) You can pass it on to your loved ones at a stepped up in basis value which totally avoids taxes for your loved ones

8) You can also set it all up into a living trust for your loved ones anywhere in the world, to get all the benefits of the real estate income based on certain conditions such as: finishing college, getting a pre-nuptial agreement, and a post-nuptial agreement, not doing certain things, or managing the wealth in certain ways and avoiding certain investments and so on.

All of the above should help you solve the mystery of where to invest and how to take advantage of the inflation.