- Personal Finance»
- Investing in Stocks, Bonds, Real Estate, More
Investing in Appreciating Assets Instead of Depreciating Assets
When many people think of investing they think lots of money and the stock market. It doesn't only include those things though. Every day you are investing. With every dollar you spend you are choosing an investment. There are two types of investments to choose from - appreciating and depreciating. Whenever possible you should choose appreciating investments and in the end you will become wealthy.
An appreciating asset is something that will gain value over time. A depreciating asset is something that will lose value over time. This might seem relatively simple, but many people mix these types of assets up every day. Keep in mind I am not talking just about money. You need to think of yourself as an asset as well. The choices you make are either good for you (appreciating) or bad for you (depreciating). Investments carry over into our entire lives. I will give you examples of different ways to invest.
Money - When you purchase a car, boat, go-cart, computer, etc you are purchasing a depreciating asset. While some of these purchases are necessary, it is not necessary to buy top of the line and spend all your money on something that will only go down in value. Buy something that meets your needs (not wants) and spend as little as possible on it. When you purchase a home, an education, jewelry, etc you are investing in an appreciating asset. These things are well worth the money and will typically go up in value or will make your worth go up in value.
Health - You body is the most important thing you have, or it should be. You might not realize this unless you have been in poor health, but it is true. You need to take care of it. This is an area where you make numerous choices every single day in your investments. When you sit at the computer playing video games for hours on end you just made a depreciating choice. You did something that will harm your body and your health. When you eat a big salad for lunch you made an appreciating choice. You did something that will improve your body and your health.
Time - Everyone has 24 hours in a day. You have to decide each day how you are going to use your time. You can invest in yourself by furthering your education, making sure you get enough sleep, exercising, etc and make choices that will appreciate. Or you can make depreciating choices with your time and waste it doing things that don't really matter to you or that harm you.
If you want to be wealthy (in more ways than just money) then you need to make good choices in all areas of your life. Chose things that will help, you not hurt and things that will appreciate or allow you to appreciate rather than going down in value.