January 26, 2014 Admin | January 26, 2014 Define the difference between appreciating assets vs. depreciating assets. Examples? Why should you care?
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Appreciating assets produce value over time, whereas depreciating assets make you poorer the moment you have bought them. Some examples of appreciating assets are stocks, bonds, real estate, a business, and an education. Some examples of depreciating assets are cars and clothing. You should care about appreciating assets and depreciating assets, because if you want to be financially free, it is imperative that you increase the amount of appreciating assets you have and decrease the amount of depreciating assets you have.
Outstanding, Katherine! Let’s review.
Most “stuff” falls under the depreciating asset category. If one focuses their efforts on accumulating “neat stuff” they will end up broke financially and psychologically. The examples of this can be seen far and wide. Advertising pushes you in this direction. You MUST learn to push back. How?
Buy appreciating assets, specifically no-load index mutual funds, as soon as you get paid. Dollar cost average your money into the markets and gradually accumulate those wealth creating appreciating assets. Focus on reaching 20% and financial freedom will be part of your future. Feel free to spend on those depreciating assets what is left after your savings, taxes, and basic living expenses like housing, utilities, and food. Save first, spend last. It’s that simple if you want to accumulate wealth gradually over time.