There is another way to place your bets on a rapidly rising inflation rate…some day. And it is a route available to most Piggs: Take out a 30-year fixed rate loan at today’s rates. Get it ASAP, and for as much house as you can afford. You will be in an appreciating asset while paying for it with increasingly worthless dollars.
The rule of 70 tells us how long it will take for principal to double when increased at a fixed percent each year, compounded. Thus, a 10% increase annually will double in seven years. (Plug in your own expected inflation rates here). Meanwhile, if your pay increases at the rate of inflation (a big if–could be more, could be less), then in seven years the pain of that monthly mortgage payment will be half of what it is today. Voila, house value doubled, monthly cost halved.
The downside: you will have to live with the guilt that you’ve impoverished that Chase or B of A or Wells Fargo bank that was foolish enough to make that loan. Expect many sleepness nights.
