Well, we're back!
Can you spot me in that pic?
That's me on my second last morning in Croatia enjoying a double espresso at one of our favorite beach side cafes.
They make this basil and mango smoothie that is out of this world.
The flavours literally pop in your mouth as you drink it.
I can't even express what it means to both Nick and I to be able to spend a month in Europe this summer.
And the re-entry to Canada this year has been challenging.
I feel like my body is telling me that it wanted to stay over there just a little longer.
The food, the espresso, the wine, the sun...it all just feels so good!!
Someone asked why I like it so much and I gotta admit, part of me feels more at home there. Not sure why, it's weird...but it's true.
Anyway, back to serious business here in Canada...
So many people don't understand that they have to outrun the line on this chart to "get ahead" financially.
This is Canada's money supply, M2:
Since the year 2000, it's gone up 5x.
That means the money supply in this country has increased a heck of a lot.
Think of it this way...
Let's say you invested $10K in some amazing stocks back in 2000 and your stock portfolio went up 4x and then you cashed out recently.
You'd be pretty happy with yourself, right?
Well, the percentage of the money supply that the $10K represented back in 2000 also represented your purchasing power at that moment in time.
Now that you invested it, and cashed out for a 4x gain you're feeling good.
But do you have 4x the purchasing power?
If the money supply in the country went up 5x during that time, have you increased your purchasing power at all?
No, you have not.
In fact, your purchasing power has fallen behind.
The currency is being debased and devalued faster than you're making gains.
It's why so few people feel like they're getting ahead.
The money supply is growing faster than people's income or wealth.
Check out this next chart...
This is Canada's M2 money supply mapped against Toronto area property prices:
Is real estate really going up?
Or is it just keeping pace with the money supply growth?
Chicken and the egg.
It's why we chuckle when people argue about property prices.
They really should be looking at the currency. It's the problem.
This is why people who have "a lot of money in their house" also don't feel overly "rich" with all the fiat gains.
Their purchasing power in life really hasn't outpaced the growth of M2.
But at least it's keeping pace I guess.
Check out what happens when you map real estate price growth to income growth:
So at least real estate keeps pace with the debasement of the currency.
Incomes clearly do not.
And here's the magical part with real estate.
As much as it's getting pooped on right now, real estate offers something that allows you to outpace M2 growth: leverage.
And leverage is rightfully dangerous. You can get smashed with too much leverage.
But if you offset it cautiously with income on a rental property then the leverage allows you to outrun the debasement of your purchasing power.
If you put 20% down...
...and your rental property goes up 10%,
that's actually a 50% gain on your investment.
That type of growth is, unfortunately, what you need to keep ahead of M2.
It's all wrong.
This shouldn't be the case.
No one should need to become a real estate guru.
But this is all by design.
Your money is designed to lose value and it's doing it at a faster and faster pace.
This is why we think real estate plays a role in the current money system.
And it's why we personally never "save" any fiat gains in anything that is a derivative of the fiat dollar.
It's why we also like Bitcoin. Pure and ultimate scarcity that cannot be debased like the M2 money supply can.
To live life on your terms we all, unfortunately, need to understand these concepts.
The system is designed to outrun your income growth and even your investments.
You need to carefully choose where and how you invest.
And where and how you save.
If you don't, you'll never outrun the debasement.
Anyway, enough fun for this week.
Living life on your terms is possible. We see people doing it all the time.
You can too.
Study up...your own perfect basil and mango smoothie is within reach.
Go for it.
And by the way...next week we're going to start releasing details for the next Your Life. Your Terms. Event in October!
Wait until you see the lineup!! It's jammed!! We're pumped!
Tom & Nick