While the Bank of Canada is confident that the inflation rates will stabilize in the next year, many Canadians are wondering if is there a way to profit from inflation?
Yes there is a way that you can turn
inflation into an opportunity. Historically, houses have been one of the best ways to profit off inflation. House price rises as well as the cost of building materials, food, gas, the cost to rent a place to live, etc.; mortgage balances decrease, and mortgage payments remain almost the same for a long period of time. For instance, if the cost to rent an apartment now is $1,500, that number will increase every year at the rate of inflation. If the inflation rate is 3% every year, the cost to rent the same place in 5 years could be approximately $1,739. In the other hand, if your mortgage payments in year 1 was 1,500, in 5 years that payment could be the same if you had signed a fix rate for 5 years term. As the mortgage balance reduces, the hose price increases incrementing your equity.
If you’d like to make 2021 the year you finally start building your equity, we can offer plenty of helpful tips and strategies. Give us a call today!