The Best Way to Survive and Thrive During Inflation and Interest Rate Rises is to Live Like a Loser

I am a single man in his late thirties and I live with my parents. However, while many of my peers are fretting over the recent cost of living increases as well as increases in interest rates, I am not worried at all. I currently have a net worth of about A$1.5 million (about US$1.04 million) mostly in ETFs and crypto. I am also very frugal. I can live off about $10k to $20k per year easily.

When most people see that I live with my parents and don't own a house, they think I am a loser, but living like a loser provides more economic security because your expenses are low. If I lose my job, I can easily only spend about $20k per year, and given I have a net worth of $1.5 million, I can live off my investments forever as my withdrawal rate is 1.3% which is highly conservative.

I pay a small rent to my parents, but even if I did not live with my parents (e.g. they force me out of the house) then I can simply live in a sharehouse, and even if I didn't want to live in a sharehouse, I could easily live overseas e.g. in Southeast Asia or Eastern Europe where there is a low cost of living. Being minimalist as well as being flexible and mobile all help in increasing your resilience. 

Buying a house does not interest me. It's great to have a good house that is good quality and is fully paid off. This I think can provide economic security. My parents own a fully paid off house, and it provides them with economic stability as they don't need to pay rent, and given I live with them, I benefit from that as well. However, houses were very cheap many decades ago whereas now they are significantly more expensive. If you wanted a fully paid off house, the question is how long will it take to achieve this and what risks will you expose yourself to along the journey? Paradise is great but if the path to paradise is paved with landmines, is it worth trying to get to paradise?

For one, saving for a deposit can take a long time, and by the time you save up for a deposit and then pay off the entire mortgage, chances are you will be dead, so the security of a paid off house may never come or come way too late. In the meantime while you pay off the mortgage you are exposed to the massive risk of sudden interest rate spikes. 

So in my opinion, it is not worth the stress to buy a house. Simply invest in ETFs and crypto and then live a minimalist lifestyle. Economic security is about maximising your net worth and minimising your ongoing expenses. Once you can live off less than 4% of your net worth, this is when you start to become very financially secure.

More Immigration can Increase Housing Affordability

The housing affordability crisis is a global problem that is affecting many countries. The crisis is caused by a number of factors, including low interest rates, rising house prices, lack of supply, and investor demand. The crisis has a number of negative consequences, including homelessness, inequality, and economic growth. There are a number of things that can be done to address the crisis, including raising interest rates, building more housing, and providing more affordable housing.

However, there are many who believe that immigrants cause problems with housing affordability by increasing the demand for housing.

However, if there is an increase in demand for housing due to immigration or natural births, there can be no price impact if there is enough supply to keep up with demand. This involves increasing density as well as increasing urban growth boundaries. It is not hard to do this. Government just need to legislate it. Furthermore, there are many tax policies that can be amended to make housing more affordable. All that is needed is amendments to legislation. Amendments to legislation will occur if governments make the change. The government will make the change if they believe the people will support it and vote for it.

This is the main barrier to housing affordability. The reality is that many voters want house prices to increase, especially in countries where most people own homes e.g. Australia. A good case study is the Australian 2019 election when Bill Shorten lost due to policy suggestions to remove negative gearing, which is a tax break primarily exploited by property investors. Overall this would have a modest effect on house prices because housing affordability is caused by many other policies other than negative gearing. However, the results of this election show that it is not immigrants that are making housing less affordable. It is the Australian people. One third of Australians own their own home outright, one third own it with a mortgage, and one third are renters. Renters are outnumbered.

If immigration were increased, it is highly likely they will become renters. If they are then given citizenship then they will be able to vote. If we increased immigration such that a very large number become citizens who rent, this can push the number of renters to over 50% thereby giving renters a majority which allows policies that promote housing affordability to be progressed. However as migrants and young Australians transition from renters to owners, they will likely vote to make housing less affordability, and so immigration must be increased significantly in a short period of time in order to boost the numbers of the renter voting bloc. Once immigrants become Australian home owners then it is likely they will vote like Australian home owners, so there need to be a sudden and steep increase in immigration.