Real estate may be the only reliable ace up the sleeve of millennials for battling the historic levels of income inequality being faced today.
Many paint the millennial generation as being entitled, lazy, and complainers. Yet, the data and financial experts show that millennials and Generation Z are facing the worst income and wealth inequality that any of us have witnessed in our lifetimes. Old traditional methods of trying to get ahead, or even keep up, just aren’t working. For many, it is real estate that will make all the difference.
Credit Suisse’ new 2017 Global Wealth Report shows that global wealth is up to $280T, and grew 6.2% in 2017. The fastest rate since 2012. The mean adult wealth in the world is over $56,000, but just 1% of the world’s population holds half of all wealth.
While many different types of countries may be seeing more prosperous times, the inequality gap between millennials and other generations appears to be worst in first world economies like the US, and Western Europe.
It’s Tougher Than Ever to Catch Up
Despite more Americans getting college degrees, and the rise of more and more multi-billion dollar tech startups, younger generations are finding it more challenging to keep up. Housing costs and living costs just keep going up much faster than wages. Without perfect credit, and strong credit history, a financial surplus, and an edge in producing income and wealth, the middle class and poor are just falling further and further behind. That’s true even if they are well educated and are working 70 plus hours a week. That’s despite today’s college students going into double the debt in education loans than previous generations. Meanwhile, the rich just keep on getting richer, and are forcing costs up more.
While there has been a lot of talk about wealth being passed down between generations, the majority of those who will receive something, typically won’t see a penny until they are 70 plus years old. What should be really astonishing is that according to Federal Reserve statistics, millennials are now making double digits less than boomers at their age.
Why There’s No Help Coming
Not much appears to be getting done to equalize this dilemma either. In fact, recent tax changes appear to maybe be making it even harder to leap the financial divide.
Twisted data is a big culprit. The media keeps trumping up gains in the stock market and wealth, as well as incremental improvements in retirement savings, and home buying. With everything sounding so rosy, why would anyone try to fix it, or change anything?
Let’s good to be positive, and we are all in control of our own futures, yet, the cards to seem to be stacked against younger generations. Even if that is simply because they have been trained and programmed to follow paths that really don’t work anymore.
The answers being floated out there don’t appear to be very reliable either. You can invest in wildly speculative bitcoin, try to create the next Facebook, or race to try and beat a robot to a tech coding job.
Then there is real estate.
Real estate may be partially to blame for the current economic disparity. Massive chunks of the landscape have been scooped up by investors and converted to rentals, mortgages still aren’t easy to get or attractive to apply for, and those flush with cash and wealth from having been in real estate for the past few years aren’t exactly price sensitive when it comes to shopping at the grocery store, which doesn’t help living costs for others.
So, what do you do? Why not ride the money train that is creating the wealth and cash surplus. That may be the secret equalizer for millennials, and one of the only reliable ones. If you are making money in real estate, seeing your net worth go up when values do, and are having others provide you an income with their rent checks, then you shouldn’t have any problem keeping up financially. Real estate is key for keeping up with, and ahead of inflation, and changes the dynamic of trading your hours for a wage. Then your income potential is no longer restricted to the number of hours and days you can work.
You can get involved as a landlord, by flipping ugly houses, or using other strategies. This may require learning something new, but there are good real estate courses and certification programs that can take just a couple weeks, and which are highly affordable, versus going back to college on a long detour that requires you to take on more student loans.