The thing is that inflation will always be chasing you if you stay in cash.
Presumably you will be renting instead of buying and that rent will be going up year after year.
Very quickly, you will find your rent exceeding a relatively (depends on mortgage deal) stable mortgage payment.
Instead of inflation eating your cash it will be working for you by eating your mortgage debt and payments.
With a (say) ten year fixed mortgage, you will know what your outgoings will be for that entire time. You can plan your cash flow and that will give you security.
That said, I have written a bit about inflation in relation to the idea of renting, monthly expenses, and so on. During periods of high inflation, you can make spending adjustments on things you buy (e.g., groceries, eating out, etc.) without feeling shortchanged one bit. You can offset inflation simply by making some adjustments, if you're even in the position to need to do so.
As a renter, you can also have long-term plans to buy (as I do) with the goal being to eliminate the majority of your housing expense altogether. if you buy in the right place, you'll pay a minimal amount for property tax, maintenance, "HOA" fees, etc.
Definitely appreciate the comment and your point of view.
Those are fair points. But while your rent might go up, you're also (likely) not paying for things like lawn care, snow removal, etc. (or maintaining the equipment if you do those things yourself). Same with repairs and other mechanical upkeep.
Don’t think like a “traditional” economist... think like a behavioural economist!... something I’ve been writing about a lot lately. Traditional economic models make too many assumptions to be reflective of real life but behavioural Economics adds on a layer of psychology to help people make better--but realistic--money decisions.
Yes, well-stated. My second choice for a major in college would have been behavioral economics. The behaviorists use actual life on the ground common sense.
The thing is that inflation will always be chasing you if you stay in cash.
Presumably you will be renting instead of buying and that rent will be going up year after year.
Very quickly, you will find your rent exceeding a relatively (depends on mortgage deal) stable mortgage payment.
Instead of inflation eating your cash it will be working for you by eating your mortgage debt and payments.
With a (say) ten year fixed mortgage, you will know what your outgoings will be for that entire time. You can plan your cash flow and that will give you security.
Definitely a logical way to look at it.
That said, I have written a bit about inflation in relation to the idea of renting, monthly expenses, and so on. During periods of high inflation, you can make spending adjustments on things you buy (e.g., groceries, eating out, etc.) without feeling shortchanged one bit. You can offset inflation simply by making some adjustments, if you're even in the position to need to do so.
As a renter, you can also have long-term plans to buy (as I do) with the goal being to eliminate the majority of your housing expense altogether. if you buy in the right place, you'll pay a minimal amount for property tax, maintenance, "HOA" fees, etc.
Definitely appreciate the comment and your point of view.
Those are fair points. But while your rent might go up, you're also (likely) not paying for things like lawn care, snow removal, etc. (or maintaining the equipment if you do those things yourself). Same with repairs and other mechanical upkeep.
Don’t think like a “traditional” economist... think like a behavioural economist!... something I’ve been writing about a lot lately. Traditional economic models make too many assumptions to be reflective of real life but behavioural Economics adds on a layer of psychology to help people make better--but realistic--money decisions.
Yes, well-stated. My second choice for a major in college would have been behavioral economics. The behaviorists use actual life on the ground common sense.
FWIW as an elder guy here, CASH IS KING. ‘Nuff said.