The Truth About 1997-2007

Did you know that real income has remained stagnant since 1997?

How did the US go through such volatile real estate and stock market cycles during the given period if this is true?

The answer is plain and simple: If the money wasn't generated through income, it must have been borrowed (or printed)!

From 1997 to 2007, household debt skyrocketed from 85% to 127% of disposable income. Mortgage debt itself increased from $3.5 trillion in 1997 to over $10 trillion in 2007.

Cool, so how does any of this relate to us?

If money is printed, one thing is inevitable: Inflation.

This hidden tax eats away at our earnings, spending power, and especially our savings. It is not hard to find that the average 12-month C.D. returns only .07% annually. Even the government’s CPI, which is historically known for being underestimated, reports that current inflation is closer to 1.2%. The long-term average is above 3.2%.

What can we do?

We can close our eyes and pray that the “buy and hold” stock market mantra benefits us over the next few decades. We can keep our money in a savings account and simply accept the fact that we would lose an average of more than 3.2% of our purchasing power every year. Or, we can invest in low-risk cash flow real estate that yields 10-15% and leave the other options in the dust.

I'm sure you know where I stand.

Where do you stand?