Purchasing Power

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So I wanted to invest my bonus in stocks but I didn’t really know what to do. And the time I might have spent learning was being siphoned away for my new programming project. Meanwhile I could almost feel my purchasing power being eroded by inflation, especially in the real estate market, where it wasn’t being accounted for by the CPI data.

I imagined that I would soon be using my own software to do the analysis, but it was taking longer than I thought. The spirits of capitalism came to visit me with a proposal. Actually it was my landlord. He wanted to increase the rent from $2400 to $2700.

I thought it was outrageous. I offered him $2550. He laughed at me and said that the market, not him, sets the rent. Then he said that he could easily get $3000 if he wanted. If you think about it, it contradicted his earlier statement.

Anyway, I laughed back and told him we were moving out.

I had figured out that if Emily and I took ALL of the money we had, got some more from our parents, made cautiously optimistic projections about our future incomes, and stayed together, then we could afford to buy something pretty nice in one of the “up and coming” areas of NYC.

This was shaping up into a brilliant solution to my investing problem. Unlike investing in stocks, buying real estate wouldn’t require much analysis, at least not much ongoing work AFTER the transaction. That was because unlike stocks, real estate never goes down. And even if it does, NYC apartments never go down.

Also, real estate was an awesome hedge against inflation. I read that somewhere. Boom. Problem solved.

But guess what?

The landlord got $3000 just like he said.

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