Heroic Investing
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Home equity is the REAL emergency

Heroic InvestingFor decades, the mantra of home owners everywhere as been, “Gotta build home equity!” We’ll admit, having equity is better than not having equity but do you realize how hazardous to your financial health it is to let that chunk of money sit there? Don’t be ashamed if you don’t because you’re not alone. It’s not a topic often touched by traditional Wall Street financial advisers or cable channel “gurus.” Heroic Investing has a sneaking suspicion they’re either not aware of it or else they don’t care.

The problem is this – inflation. Every day, week, month, year, the value of your home equity is wasting away due to the devaluing effect of inflation. Untapped home equity is no better than burying your spare cash in mayonnaise jars in the back yard. Ouch. That cliché’ is so old it actually hurt to write it. But hopefully you get the point.

The basic danger of inflation to your cash, savings, and investments, is that it diminishes purchasing power over time, and probably in a lot less time than you realize. So even though you may be seeing a face value increase in home equity as you pay the mortgage down, the real value of what you could do with that money if you sold the house is being eroded by inflation.

What can you do about it? We thought you’d never ask. The trick is to transfer money out of a devaluing asset (home equity) and into one that thrives, even in inflationary times (income property). Yes, we are suggesting you assume willingly assume more debt but only if it’s the right kind of debt, which is fixed-rate, long-term loans tied to income producing real estate. This way the bank foots the bill by putting up the money and, over time, the real value of the loan actually declines, even if you pay nothing but interest.

Contact us at HeroicInvesting.com to learn the safe way to turn home equity into financial freedom.

The Heroic Investing Team

Flickr / Mike Licht.NotionsCapital.com