Real estate guru Grant Cardone says saving money is a losing financial strategy due to inflation and taxes, and suggests investing in real estate as a better option.
In a May 19 post on X, Cardone breaks down what would happen if you had saved $100,000 since 2020 versus investing the same amount in real estate, which he says benefits from inflation.
The $100,000 savings would earn $20,000 in interest at 5%. However, you would have to pay $8,000 in taxes, and your purchasing power would have declined by $25,000 due to inflation. That means you would have lost $13,000. Cardone noted that he used a 5% interest rate, although the average yield on a savings account is 0.6%, according to Bankrate.
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If you had invested that same $100,000 in real estate, your cash flow would be $30,000 and your taxes would be deferred. The inflation effect would be $25,000, making your initial investment worth $155,000.
"Average rent prices have increased 8.85% per year since 1980, consistently outpacing wage inflation by a significant margin," Cardone said.
He said that real estate investors benefit from the government printing money because rents rise in proportion to how much is printed.
"While the money in the bank may be liquid and the real estate is not, the saver is actually losing money for having liquidity," Cardone said.
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The case against saving money is a recurring theme in Cardone's social media posts. In a post earlier this month, he noted that saving money without considering investments or strategies to combat inflation could diminish the value of those savings.
"Saving money is for losers," he wrote.
Cardone recently predicted that the Federal Reserve will reduce rates when political pressures subside. He pointed to economic indicators such as rising consumer credit card debt, depleted savings, declining mortgage applications, and commercial debt that will force the Fed to cut rates to mitigate an economic downturn.
Cardone is CEO of Cardone Capital and the bestselling author of "The 10X Rule." He owns and operates seven privately held companies and a $4 billion portfolio of multifamily projects.
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