I love everything Pieter Levels puts out. This digital nomad is an inspiration of my. The man has cracked the code for living well in the information age.
After studying @levels https://inflationchart.com/spx-in-m1 along with his writing, he comes to some important conclusions.
The money printing being done from COVID’s economic effects and QE is causing inflation to happen. This inflation is pushing the prices of assets like stocks and real estate to all time highs.
This is good for people who invest in those assets and bad for people who don’t.
How common is stock market and real estate investing? According to Forbes, 55% of Americans own stocks.
Homeownership rate in America is at 63% according to the Census Bureau.
All this means is just over half of American’s are growing their wealth at a steady clip thanks to the enormous level’s of money printing the Federal Reserve continues to deliver into the economy.
The middle class will continue to loose out wealth accumulation due to this class not investing in stocks or real estate across their portfolios. The S&P 500 has risen over 200% since 2009 meaning the wealth gap continues to grow.
Even if the price of rentals and stocks have gone up, did their intrinsic value really improve to justify the price increase? In most cases, no.
Yet, with these higher prices it’s forcing young people to work longer, sacrifice on their life style, and eat beans and rice to create any delta between their monthly income and expenses to invest.
It’s harder to invest nowadays than it was for the boomer generation. Housing and higher education costs have exponentially increased while wages haven’t risen since the 80’s.
When grandpa could work part time at the grocery store during college and leave that educational environment with zero student loan debt and some savings to boot, grandpa crushed it. Meanwhile in today’s climate, I personally ran a successful business in college (residential house painting) and moonlighted a warehouse job during my semesters. This income only covered basic living expenses and fun times.
I left college with $25,000 in student loan debt that was accruing interest. I believe it’s MUCH harder for a young person to get ahead in today’s economy than any previous generations.
Everything is more expensive, wages are stagnant, many jobs are outsourced / automated. The list can go on but let’s not be negative. Let’s focus on solutions.
I’m a successful young person so it can be done. I do not come from family money. I received no financial education growing up.
So how did I earn a six figure career, 1M+ in real estate under management, and a CoastFI paper asset portfolio by 30?
Here’s what worked for me:
I’ve poured hundreds and hundreds of hours into personal finance education through podcasts, blogs, and books.
I track my money down to the penny. Personal Capital is great for that.
I’ve house hacked for the past 7 years.
I drove a beater car until it died. Then I bought a quality used SUV for work commutes and adventure time (you gotta live a good life!).
I continually invest in index funds inside my 401K, Roth, and brokerage accounts. I continually invest in real estate.
By maintaining my discipline over the years, my six figure net worth continues to grow. There’s nothing fancy or sexy about growing wealth. It’s a slow, gradual process that takes years to do. I’ve found the majority of people would rather dump money into their vehicles and clothes than invest. That is why most people will forever be broke.