Comments on: Time & Inflation – Why You Should Quit Fighting These Forces Of Nature

By: The Myth Surrounding Positive Cash Flow Property @ mrd

The Myth Surrounding Positive Cash Flow Property @ mrd — Fri, 10 Jun 2011 07:52:43 +0000

[...] don’t wind up a sad statistic… payday is coming for those who wait and allow time and inflation to work for [...]

By: Exact Copy Of Article Written One Month After Collapse Of Lehman Bros – On 17th Oct 2008 @ mrd

Fri, 08 Oct 2010 04:10:00 +0000

[...] and ability to service that debt… it may! We need to also consider opportunity cost, because time and inflation ensures standing still is really a backward [...]

By: Nick Lockhart’s DEBT Series – Part 2… “DON’T PANIC” @ mrd

Fri, 01 Oct 2010 06:38:02 +0000

[...] and ability to service that debt… it may! We need to also consider opportunity cost, because time and inflation ensures standing still is really a backward [...]

By: Don’t Pay Your Debt Off @ mrd

Don’t Pay Your Debt Off @ mrd — Fri, 09 Jul 2010 07:27:00 +0000

[...] maintaining those borrowings and not paying them down, time and inflation are paying down the debt at a rate of $30,000 a year. In time, what starts out to be a sizeable [...]

By: Martin@mrd

Martin@mrd — Sat, 19 Dec 2009 22:10:19 +0000

Hi Ian
I assume you are referring to the statement “A $400,000 interest only loan today will still represent a $400,000 loan (productive debt) in a years’ time.” ?

You seem to be adding the interest to the loan?

I would never do that. Sure to hold a portfolio of 12 properties I capitalise my expenses (borrow them) rather than pay from my cash flow however I always pay the interest from my cash flow (rents) so the debt on the investment property will remain the same in dollar terms over the years. The value will decrease with inflation as we point out in the article.

Certainly my more recent purchases are still negatively geared and the rents may not cover the total interest (depending on rates as I have some loans fixed at 4.99%) but my earlier purchases will cover that . The first unit I bought in 1998 was getting $140 a week rent and now gets $300 a week so that pays for itself and contributes to my later purchases that have not had time for the rents to grow.

So no, the debt remains the same in dollar terms and the true value of those dollars decreases with inflation.

By: Ian

Ian — Sat, 19 Dec 2009 08:51:13 +0000

As I posted on Facebook wouldn’t the $400,000 be $432,000 after one year with interest and about $465,000 after 2 and so on?

By: Truth About Housing Affordability @ mrd

Truth About Housing Affordability @ mrd — Fri, 04 Dec 2009 04:08:38 +0000

[...] In March 2008 Nick wrote a really interesting article he called: “Time & Inflation – Why You Should Quit Fighting These Forces Of Nature”. I recommend you read (or re read) it >>>more. [...]