A couple of green candles in my feed today - pity they need to be about 300% longer to start getting a profitable return - is that depressing? The last few months haven't been great for my portfolio, against Bitcoin or fiat-wise. I don't hold that much Bitcoin, but I was hoping to add a little more, but then the price started to slide away and I am not great at selling.
From an investment perspective, this year hasn't been great for extending, although all of the extra money has gone straight into an investment, our house. While this is normal, it doesn't generate income and will always be somewhat of a cost - at best, it serves as a store of value and I do consider it a better option than renting, especially in Finland where the rental prices are high and then the service fees on top can be quite ludicrous.
On top of that, most of the apartment buildings are built on rental land, which can add a lot to the yearly costs. We own the land ours is built on, so the rates are lower. There have been some recent cases where the rental land tax in some areas have increased by 500% and people have been forced from their homes. Rent-seeking behavior at its finest.
Renting can become a cycle that is very hard to break in some places, even though it is convenient and flexible and could leave extra disposable income, depending on location. The problem is as we know, extra funds doesn't mean those funds will be used to generate and for many, it will end up being used and lost, meaning there is nothing to "hand down" to another generation. This means that generational wealth is harder to build while renting. For example, my wife and I will hopefully pay our house off within our lifetime, meaning that Smallsteps will inherit at least a house, on top of whatever else she can manage to scrounge together in her future. Of course, I am hoping that she will be able to get a little more than that too, but that is going to depend on a more volatile asset class.
While I am looking for a change in the entire structure of the global economy in the long-term, I don't think it is a good idea to go "all-in" on that future and instead believe that incremental shifts of wealth onto the new economy is better. For me, my house is probably going to be the only real "traditional" investment and I think that because I own it and it is something tangible, that can more easily be moved into the new economy later, meaning that the value of it is the value of it and the only thing that I would need to do is sell it for Bitcoin or something, rather than cash. That would mean that the person buying would need to have BTC to transfer to me, not euros - instead of me taking euros and buying BTC.
I see that this is going to happen more and more as while goods and services will start taking crypto, individuals will start holding it too, meaning that they will be more comfortable in using it as a token of sale in their private lives, not just buying something through PayPal. Demand and supply.
While many people think it isn't "real", because of the way blockchains function, crypto is a lot like a house, location matters. That location is precise and whoever has the key to the front door, has access. It is about ownership - whereas centralized currencies are never actually owned, users are renters and those who have the rights are able to change the rates at any time, through something like printing trillions of dollars in value globally to combat a virus. How exactly does printing money help the situation, considering it is going to be counteracted by inflation and when things return to "normal", average people are going to have lost ground against the inflation rate?
But, all that money is being spent by consumers and being converted by institutions into something they own, as in this climate, no one wants to hold cash, with the rate of inflation increasing and negative interest rates punishing holders. as said, you might have millions in the bank, but it isn't yours, it is on loan - the price you pay to have it is not under your control, but you could use it to generate more income than the price of holding it. What do you buy?
I don't think that the majority of the world has a very good grasp on the way the economy works at a local level, let alone at the global level where there is so much complexity and obfuscation that it is impossible for the average person to understand, let alone effectively participate. The various steps and technologies over the last few decades has further removed our involvement and connection with ownership and as a result, we have lost most of the managerial control we have over our wealth. We use cards and touch pay, we don't even touch the money that we are renting from the central authority and, we are encouraged to consume and dispose of, rather than invest and hold.
Where this all ends up is in a massive disparity between the haves and have nots, but it takes time to become apparent as we look at the haves as people who have material goods - but in actual fact, the haves are the ones who actually own their goods, a much smaller group by far - most of us are renters. This is becoming more obvious now and we can see the social movements that are a direct response to the disparity and people recognizing that over time, the deck has been so heavily stacked against them, there is now nothing that they can do as they own nothing of consequence, other than the obligation to service their racked debts.
Ownership is important in this world and the thing that people should remember is, that no one is going to give it to you, it has to be earned - one way or another. One thing to consider is, if you don't know where your wealth really is, do you own it?
Taraz
[ Gen1: Hive ]
Posted Using LeoFinance Beta
I'm a freeholder, for better or worse. I have no debt service at all unless property tax can be called debt. I suppose I could make a case for that.
Interest rates are approaching 0. Inflation is rising (in spite of the government denials-I KNOW what things cost and what they cost 5 or 10 years ago). What can possibly go wrong?
I do not have any idea where the tipping point is, I don't think we are particularly near it yet. I do think we are seeing some astute institutions mitigating their risk to the best of their ability, and some of that is starting to include crypto. So relative acceptance just can not be that far off.
I still think owning a house is a good thing. You have to live somewhere and that ownership might be the only thing a fraction of the public ends up with.
Are the government denying inflation? That is ballsy. I wonder how much of the "economy is growing" is actually down to printing money?
I feel that some of the businesses are recognising the risk of holding cash, not only because of the inflation and negative interest rates, but also the potential that they will be targeted for it as everyone else suffers.
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ENGAGEtokens.This is an issue I and my wife fight over all the time. Renting vs owning is such an issue where you can never agree upon. Renting brings the flexibility you need, ease and less burden while owning gives you a sense of security, rooting and investment. I like to buy a house so that the cash we have in Bank does not degenerate. But, owning is a house is a tough ask as we have to be disciplined with our earnings and if not managed well could hamper our quality of life. The house price is out of the roof in Toronto and we can only dare to own a house.
There are questions of going to the suburbs, commuting to work and quality of life. We are still debating :P
It is a big step either way. I have bought to own in Finland since about 2008 and after the first two apartments, wa able to have the deposit for a house. It is a big step still.
Yeah. It is a big step. And the place we are in right now is a bargain that noone would let go. It's super cheap and convenient for us with no commute to work at all. So, owning a house means to rent it to others.
Btw, it's almost 2 in the morning in Europe. What are you doing this late in Halloween 🎃?
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ENGAGEtokens.Compared to renting, owning your own home makes sense from a financial perspective in the larger cities in Finland if you don't have to move any more frequently than every 5-8 years. Owning a home in a small town let alone the countryside is a huge losing proposition. But being a homeowner where you live is no goldmine when it comes to the suburbs. Homes there simply do not appreciate all that much per year. That's a direct consequence of having an aging population.
Owning a home anywhere but the most desirable areas in the largest cities is no investment in Finland. It's more like consumption. You have to live somewhere and the most economically feasible option is to buy your own home excluding 90% of all the municipalities.
In the long term, radical advances in automation and robotics in construction could make building houses much cheaper.
Owning a home in a small town over time yes, but potentially, buying a house in a small town might be a good investment for the future, if it isn't too far away from a large town. I think there will be some interesting transport innovation coming.
The change in building practices will have a large effect too, as could immigration.
Self-driving cars capable of driving drunks home from the city in the weekend nights? There's still the time loss and cost, although it will be possible to make better use of the time when one does not have to drive.
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If you have a Mortgage the Bank owns your house. It looks like Bitcoin is the only Crypto worth Hodling
Yes, but my daughter won't have a mortgage on it when she gets it. Generational wealth starts somewhere.
I think looking at bitcoin only is a short view also.
Buying the house was the smart move as whatever value you put in you will get more back at some point. I have owned a few houses in my progression up the ladder and it is scary how much you can make in a fairly short period of time. We now have two with one being a rental and nearly paid off. Worth something here, but with the exchange rates I am losing ground with overseas currencies. I am always mindful of that and need to stay ahead as I think you have to cover all bases. Something tells me the next 10 years things are going to change massively and owning your own property will be crucial.
Losing against foreign currencies due to government mismanagement is a huge risk that most don't consider. Very good point.
The next 10 years are going going to see disruption like we haven't seen in alomst 100 years.
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Of course not. Only after realizing that this is our wealth, we can say 100% that we own it. Given the unpredictability of the future (the coronavirus is an example), having your own home is a huge wealth !!!
I think many people have no idea what they are actually invested into, as they have their money in managed funds and indexes. In a worst case scenario, they have zero access.
Dear @tarazkp, Perhaps Finland has a small population and a small manufacturing industry, so rents seem too expensive. Is your property value low because your home is far from the city?
Currently, real estate prices in Korea have risen significantly due to the influx of Chinese and Southeast Asians.
Koreans expect that the size of the Korean economy, affected by the development of the Chinese economy, will surpass Italy.
Certainly, China's economic growth gives the expectation that the size of the East Asian economy will soon surpass Europe.
As far as I know, Finland has a small population, so it has a small manufacturing industry.
I wish my friend @tarazkp's financial difficulties will be resolved.