Cash Is Not King
Ouch! This hurts to say. It goes against everything I have been taught. It goes against every old saying and everything that feels like what a common-sense position should be. Cash is king.
A Position We Cannot Escape
America has painted itself into a position that it cannot escape. We have more debt than we can ever pay off. Let’s not blame Republicans or Democrats, they are both equally guilty. After seeing the dilemma we are in, let’s say the Federal Reserve Board goes to an Evil Securicor. The conversation goes something like this:
Federal Reserve Board:
“America is in a difficult spot. We have more debt than we can pay off without increasing the income tax rate to 90%. The weight of the debt is weakening our position in the world and the idea of a 90% income tax rate will never pass Congress. To manage the cost of carrying our massive debt, we already reduced the interest rates to almost zero. However, even that is not helping. What can we do?”
“No problem. I have an answer. Increase inflation as fast as you can! Increase taxes so the cost gets passed through the entire system. Add tariffs so that everything will cost more. The more inflation, the better. Since everything will cost more, employers will need to pay their employees more. This will cause more inflation. Then using the cheaper inflated dollars, you’ll have plenty of money to pay off the debt. Sure, the people who loaned the U.S. money will be paid with inflated dollars that are worthless, but that’s not your problem.”
And so, it has come to be.
The Worst Asset to Hold
Each year our dollar buys less and the rate of inflation is poised to start increasing at an accelerating rate. Money is the worst asset to hold in these times. This brings us to the obvious next two questions:
- What is a good asset to hold in these times?
- What is the best way to hold it?
The Best Asset to Hold
So, what is a good asset to hold during these times? Consider trading your dollars for the most reliable assets to hold for the next 10 years; hard assets. Hard assets ride the inflation wave just by being there. For example, residential housing.
Will residential housing be the most profitable asset in the next ten years? Probably not. That will probably be some tech stock that no one has heard of. Remember, we said the MOST RELIABLE asset.
What about gold? I’m not crazy about an asset that will never pay me interest, dividends, or rent. I’m not crazy about an asset that can only buy at retail and sell at wholesale.
Residential housing can and will appreciate plus earn rent income along the way.
The Best Way to Hold It
As far away from the taxman as possible! This leads to the best way to hold this asset. This is inside a Self Directed Roth IRA so 100% of the value comes back to you. The benefits of a Self Directed IRA include:
- Flexibility to invest in alternative assets
- Ability to diversify your portfolio
- No federal income tax or federal tax filing on the growth of your investment
Don’t have a Self Directed IRA? Don’t wait! Take back control of your retirement funds before it is too late. Click here to see our process.
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