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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.

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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.


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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.


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