Inflation is a necessary evil, especially in the current economy where its rates are increasing faster than ever. Most financial advisors ideally recommend investing as one of the best ways to keep pace with it. No matter how much you save, the cost of the goods keeps increasing and something you started saving for 2 years ago could still be out of your budget. With its constantly increasing prices, real estate is one of the best examples of the repercussions of inflation, but also of the most recommended ways to hedge it. 

While stocks and bond prices can be directly affected by global changes such as pandemics, wars and consequent fuel price surges, land and real estate prices continue to increase at steady rates. Buying a property with an intention to eventually sell it can prove to be profitable, especially if your home is aligned with all the modern decor trends. Apart from its appreciating value in the real estate market, rental income is another way in which owning a home can shield you from inflation. Read our blog post on why you should invest in a home when you’re young.

Kasu Homes make for great investments. Not only are they located in up-and-coming neighbourhoods in Goa – areas in which properties have been rapidly gaining commercial value, but the quality of construction, architecture and aesthetics command a high resale value. Additionally, buying a home during it’s ‘new launch’ phase is a great strategy as you can get the best prices, and it allows you to customize your home the way you desire. Follow us on Facebook and Instagram to stay in the loop of our upcoming projects in North Goa.

Contract-based rental income beats inflation, which is a wonderful source of income in a tourist state such as Goa. Regardless of whether you have purchased a second house or have spare rooms in your current one, renting it out can turn out to be extremely profitable. Moreover, as a general practice, contract-based rents tend to increase by a certain rate annually. This means your rental income keeps increasing with an increase in the inflation rates. In India, most landlords increase the rent by 10% after the contract has ended and before it has to be renewed. Furthermore, owning a home means you avoid paying this ever-increasing rent. Saving enough to avoid paying loans and the interest on it can further help you battle inflation. What this means for an average homeowner is that not only can their homes help them avoid paying rent but also bring them additional rental income. 

The idea is to increase your income enough to beat the rising prices of all things everywhere. Investing in fixed deposits, sovereign gold bonds, the stock market, and mutual funds are some ways to increase the value of your money. However, real estate counters the drawbacks of these schemes by creating a steady source of income for the landlord through rent. Moreover, if at any point you wish to sell your property, based on its locality and condition, it can get you a much higher price than what you paid for it. 

There is no doubt that in an ideal market, real estate should offer returns good enough to hedge inflation. However, this in no way means that you should limit your investments to just real estates. While the real estate appreciation has mostly been steady, every once in a while the bubble bursts and a price correction occurs, especially when its demand starts falling. For instance, during the pandemic, the demand for houses fell drastically as people started going out of jobs and had to resort to utilising their savings or worse, were pushed into borrowing and debt. However, the housing market did see a quick recovery due to an increase in the demand for more spacious homes caused by the need to quarantine. Even then however, landlords continued to demand and even increase rents.

In times like this, having a backup investment plan can really help counter any loss. The best way to go about shielding yourself from inflation is by figuring out your income and how much of it can be spared for investment. This can then be divided into at least a couple of different options to create a more efficient investment system. That said, time and again, real estate has continuously proven to be a worthy source of appreciating returns, even when the going gets tough.