• Discounts and special offers
  • Subscriber-only articles and interviews
  • Breaking news and trending topics

Already a subscriber?

By signing up, you accept Moneywise's Terms of Use, Subscription Agreement, and Privacy Policy.

Not interested ?

The ‘big scam’

Cardone’s aversion to maintaining an emergency fund may be rooted in his perspective on fiat currency.

“This is the big scam right here,” he told DJ Vlad, holding up a $100 bill.

He explained that if the bill had been printed in 1973, the year DJ Vlad was born, it would still have "$100" printed on it today. However, due to the impact of inflation on the U.S. dollar's purchasing power, the bill wouldn't buy nearly as much today as it did in 1973.

“It should say $11,” Cardone remarked.

Over the decades, inflation has indeed eroded the purchasing power of money for Americans. According to the inflation calculator from the Federal Reserve Bank of Minneapolis, $100 in 2023 was equivalent to just $14.57 in 1973 dollars.

Given this stark reality check, one might wonder how to hedge against inflation. Real estate — a favorite of Cardone’s — is one well-known option. As the price of raw materials and labor increases, new properties are more expensive to build, driving up the price of existing real estate.

However, if you think owning a home means you are all set, Cardone has a surprising message for you.

Elevate Your Investments with Moby

Gain a competitive edge with Moby's expert investing insights. Our data-driven analysis and personalized recommendations empower you to make smarter investment decisions. Enhance your portfolio and stay ahead of market trends. Start your journey to financial success today at Moby.

Get Started

Home vs refrigerator?

Home equity is often a substantial component of American households’ net worth.

A study by the Pew Research Center found that the median net worth of U.S. households was $166,900 in 2021 when all assets were included. However, when home equity was excluded, the median net worth dropped significantly to just $57,900.

Cardone, however, believes that home equity shouldn’t be included in the calculation at all.

“Equity in a home should never be considered as a net worth number … It’s a place you live. It would be like counting my refrigerator on my net worth statement,” he stated.

Cardone highlighted that owning a home entails numerous related expenses and does not generate income.

“The value of your home should not be considered as a net worth item because, one, it doesn't produce income; two, it's a liability because you're paying property taxes, you probably have debt on it,” he explained, adding that a home also requires annual maintenance and incurs broker fees when you sell it.

To be sure, owning income properties also comes with many of these expenses. However, the key difference is that high-quality income properties can generate enough revenue to cover these costs and still leave you with a profit. This potential for positive cash flow makes income properties a more attractive investment compared to a primary residence, which typically does not produce income.

These days, there are many real estate investment trusts (REITs) and crowdfunding platforms that enable everyday Americans to invest in income-producing properties.

Sponsored

This 2 Minute Move Could Knock $500/Year off Your Car Insurance in 2024

Saving money on car insurance with BestMoney is a simple way to reduce your expenses. You’ll often get the same, or even better, insurance for less than what you’re paying right now.

There’s no reason not to at least try this free service. Check out BestMoney today, and take a turn in the right direction.

Jing Pan Investment Reporter

Jing is an investment reporter for MoneyWise. He is an avid advocate of investing for passive income. Despite the ups and downs he’s been through with the markets, Jing believes that you can generate a steadily increasing income stream by investing in high quality companies.

Disclaimer

The content provided on Moneywise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.