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Appreciating Assets 101: Your Guide to Growing Wealth

By Forrest | Last Updated: March 28, 2021

What do Jeff Bezos, your parents, and McDonald's all have in common? They all own appreciating assets. 

By purchasing assets that increase in value, you can grow your wealth with a steady portfolio of investments.

Some appreciating assets are can generate a lifetime of income for you and your family, helping you to reach financial independence and retire on your terms. 

In this post, I'll explore what assets are, what makes them increase in value, and examples of appreciating assets and depreciating assets. Let's get started. 

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What is an Asset?

An asset is defined as “a resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide a future benefit.” by Investopedia.

You can think of it as something you own that will increase in value. Assets can be many things that increase your net worth — we’ll explore some of them below!

What Makes an Asset Appreciate?

When you think of economics in general, you can find the reasoning of why assets appreciate – the supply and demand curve. 

For example, the value of a home will rise because of increased demand for your home while supply for your home is low. If there is a surplus of homes similar to yours, your home's value may depreciate. 

Real estate, stocks, and other assets all appreciate because the demand of them outweighs the supply. 

When it comes to income producing assets you'll need to dedicate a period of time to let them grow to build wealth and increase your net worth. 
 
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23 Appreciating Assets You Should Own

If you’re looking to grow your wealth, it’s no secret that appreciating assets are vital. Here are some of my favorite assets you should consider holding to grow your net worth.

Stocks

Similar to real estate, stocks are a widely held appreciating asset that grows over time.

You can think of stock as owning a small portion of a publicly-traded company. For example, if you purchase one share of Amazon stock, you would own a very small percentage of the company. While you won't have any control of the company with just one share, it's possible to purchase enough shares to gain the support of the company and help the company make informed decisions.

Because businesses can be volatile, stocks don’t always increase in value. However, if you invest in historically strong companies, these will likely increase in value and be appreciating assets.

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There are several types of stocks you can invest in including value stocks and growth stocks. These types of stocks can be simple to understand.

Value stocks grow more steadily and have a history of strong financial performance. These stocks will routinely pay dividends to investors. Growth stocks, on the other hand, tend to be newer and are in the early phases of a business growth cycle. This means that the returns can be exponential, but are not guaranteed. These stocks do not tend to pay dividends as all of the profits get reinvested back into the company. Because there is no dividend, the money you make will be from the appreciation of the stock price.

Investing in the stock market is a perfect way to increase your net worth and build wealth. If you don't prefer to pick stocks individually, you could consider investing in a private equity fund, but you'll need some serious cash to do so. Private equity fund typically require large investments. 
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Appreciating Real Estate Assets

Real estate is one of the most widely held appreciating assets because it is a piece of our everyday lives. That’s right, your home is considered an asset that appreciates over time and builds wealth. But that’s not the only form of real estate that’s considered an appreciating asset. I’ll explore a few more options below.

Investing in real estate provides several advantages including increased diversification in your portfolio and a hedge against high inflation. 

Whenever making any real estate investment, you'll want to consider how easily it can be managed and maintained. 
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Your Home or Mortgage

As mentioned above, your home is likely one of your largest appreciating assets. As demand for homes continues to increase, so will your home's value. 

When we analyze real estate investment returns through a vacuum, the results can be steady and sufficient. But there are some outside factors to consider before going all in. 

One of the largest factors that affect your home's value, is the local market and economy. If you live in a town with a massive company that employs many people, this is a benefit to your home's value. However, if that company were to move locations outside of your town, your home's value and local real estate market may rapidly plummet. When purchasing a home, try to find a location with a robust economy that's not dependent on one or two companies. 

Related: My Favorite Compound Interest Investments

REITs

A real estate investment trust (REIT) can be described as a stock that owns many pieces of real estate. These investments will often hold multi-family or commercial real estate properties that increase in value. 

These are great examples of appreciating assets because of how diversified they are. Where investing in real estate on your own, you may be limited to one asset class, perhaps a single-family home, or condo. But with a REIT, you simultaneously own many asset classes in several locations. 

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Rental Properties

If you own a rental property, this is a great example of an appreciating asset. Similar to your own home, a rental property will likely increase in value as time moves forward. Rental properties can include various forms of real estate such as single-family homes, duplexes, condos, or commercial real estate. 

Crowdfunded Real Estate Investments

Similar to a REIT, you can also invest in crowdfunded real estate assets to grow your money. These investments are essentially a method for people to invest in larger real estate assets that you normally wouldn’t have access to such as a office buildings or apartment complexes. 

There are several crowdfunded real estate companies like CrowdStreet, Fundrise, and more. With these companies, you can invest your money in large real estate assets that are completely managed by the fund. 

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Bonds

Bonds are forms of debt capable of being purchased by investors in exchange for consistent payments with a set interest rate and maturity date.

Because bonds pay you money over time, they are considered an appreciating asset and are a great option to build wealth. 

There are several types of bonds — corporate, treasury, or municipal. Each type of bond offers different interest rates, maturity dates, and ratings. 

If you’ve ever received a savings bond, it is likely a treasury bond issued by the United States government. Because the US government has strong credit, the interest you will accrue will be minimal, but your risk is extremely low. 

It is common to shift a retirement plan to include more bonds as your retirement date approaches because they are low risk.

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Mutual Funds

Mutual funds are a group of assets managed by a financial professional. These assets commonly include stocks, bonds, and other treasuries that increase in value and are well diversified. They can be purchased through many brokerages including Stash, one of my favorite investing platforms. 

Mutual funds are a strong appreciating asset because of how diversified they are. 

If you're just getting started investing, mutual funds can be a great option to grow your money and net worth. 

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ETFs

Exchange-traded funds (ETFs) are very similar to mutual funds in that they can be thought of as a group of stocks or other assets held together. The main difference between mutual funds and ETFs is that mutual funds are more actively managed whereas ETFs are more passively managed. 

Because ETFs are more passively managed, they tend to have lower fees making it a great way to make your money work for you.

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High Yield Savings Accounts

Savings accounts will typically generate some interest. While this amount may not be extreme, it can add up making it an appreciating asset. 

High-interest savings accounts can offer upwards of 1% interest annually, much higher than a traditional savings account. Interest rates vary and depend on current market rates. 

Businesses

Businesses can be one of the most lucrative appreciating assets because of how much money they can make. Even the simplest of businesses can make thousands of dollars each month. 

For example, a pressure washing business might not seem very profitable, but it can bring in thousands of dollars each month. Below are some of my favorite businesses you can start to become your own boss.

Currencies

Even though you may not realize it, many currencies can be considered an appreciating asset. Investing in currencies can be somewhat speculative as there is no definitive return on investment. 

There are a multitude of currencies you can invest in including the USD, the EURO, the Japanese Yen, and the Great British Pound.

Land

Similar to a home or other real estate assets, land can appreciate in value rapidly if supply is low. As land becomes more scarce, it will appreciate and make you money.

Investing in land will require similar circumstances as a mortgage. You’ll need to have money down and the income to prove you can make routine payments. 

Once you've purchased land, it can then be added to your net worth. 
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Peer to Peer Lending

Peer-to-peer lending is a form of investing similar to other types of lending like investing in bonds. In this instance, instead of lending a corporation or government money, you'll be lending money to another peer. 

Peer-to-peer lending can help your money grow as your returns compound, therefore making it an appreciating asset. 

The returns on peer-to-peer lending will depend on the credit of the individual seeking cash. For those with strong credit, you'll likely see interest rates between 3% to 6%. For individuals with lower scores, you might find interest rates as high as 10% to 12%, but this comes with the risk of the individual not paying you back. To optimize your portfolio, you'll want to balance the risk vs reward when investing. 

Certificates of Deposit (CDs)

Similar to a savings account, certificates of deposits will increase in value over time making it an appreciating asset. CDs typically have low-interest rates, but it is still better than a standard checking account. It's common to find a CD of an interest rate around 1% to 2%, but this will depend on current market rates.

One of the key differences between a CD and a savings account is that you cannot withdraw money from a CD without a penalty. Your money will not be as liquid with a CD compared to a traditional savings account. 

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Cryptocurrency

Cryptocurrency is highly debated as an asset in general, much less an appreciating asset. Because of its extreme volatility, some see it as a speculative investment while others argue that its utility is only rising, giving way to an increase in value. 

There are now hundreds of types of cryptocurrency with a few key players – Bitcoin, Bitcoin Cash, and Etherieum. 

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Stamps 

Stamps are a collectible that increase in value for certain types. Older stamps that are rarer can drastically increase in value each year making them a great appreciating asset. 

Sports Cards

Another collectible that people might invest in are sports cards. These cards can explode with the performance of a player or the death of a legend. Sports like football, basketball, baseball, and others can rapidly increase in value. 

Sports cards can be extremely valuable appreciating assets that can sell for thousands of dollars. Related: Best Ways to Turn 10k into 100k

NFTs

Non-fungible tokens are the newest type of investing that can be similar to both baseball cards and cryptocurrencies. In short, you can think of an NFT as a digital asset that is one-of-a-kind that can be purchased and sold. 

Because of the digital nature, NFTs can be many things. Digital artwork, sports highlights, and other digital assets can all appreciate. 

To date, the highest-selling NFT was Beeple's first 5,000 “Everydays” for $69 million.

Historic Vehicles

Historic vehicles and classic cars can be another appreciating asset worth investing in. If you’re a car fanatic, investing in historic vehicles can be a fun hobby that can make you money. 

Depending on the vehicle you own, it’s possible to make over $1 million for your car or truck. 

Celebrity Autographs

Celebrity autographs aren’t thought of as an asset, but they certainly can be. Depending on the celebrity, you might be capable of selling your autograph for hundreds of thousands of dollars. 

The value of celebrity autographs typically explode in value with the death of the celebrity, unfortunately.  

Domain Names

Certain domain names can be appreciating assets if purchased with thought. Shorter more brandable domain names can become worth millions over time as they become sought after. 

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Websites

Building an online business can be an appreciating asset that provides passive income for a lifetime. As your website grows and traffic begins to rise, so will your income. Because websites can make money in a variety of ways, your income can grow exponentially. 

Related: Make Money Flipping Websites

Precious Metals

Some precious metals like gold, silver, or platinum can be appreciating assets that increase in value over time. These assets can help to grow your net worth and diversify your portfolio long term. 

How to Purchase Appreciating Assets

There are many ways you can purchase appreciating assets but it depends on the assets you’re looking to invest in. 

For example, if you want to invest in stocks, mutual funds, or ETFs, using Stash is one of the easiest ways to get started. Register for an account here to get started.

To invest in real estate, you can take out a mortgage for your home through a local bank or credit union. You can also opt to invest in crowdfunded real estate through PeerStreet. 

If you’re looking to invest in cryptocurrency, Bitcoin is a great platform to help you get started.  

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Do Appreciating Assets Have Risks?

Because assets are considered an investment, there is some risk involved. While many of these assets have a history of positive returns, there are some that might not perform to your expectations. 

For example, the stock market maneuvers through various economic cycles. Some years, the market may gain 20% or more, while other years it may drop 10%, 20%, or even 30%. Because of this, you’ll want to consider your assets as long-term investments to decrease short-term volatility that may occur. 

Another way to minimize risk on your assets is by staying diversified. This means owning several types of assets so that if one underperforms and another over performs, you won't be at a significant loss. 

What Are Depreciating Assets?

Just as some assets increase in value, some will decrease. These assets are known as depreciating assets and are not good uses for your money. There are many types of depreciating assets you should avoid that we'll explore below.

Non-Historic Vehicles

A new car is the prime example of a depreciating asset. As soon as the vehicle is driven off of the car lot, it will likely depreciate in value around 10% to 20%! 

Instead, try to purchase a vehicle that has already depreciated in value. These are typically a couple of years old.

Computers & Electronics

Computers and other electronics are great examples of depreciating assets because they can lose their value quickly. As technology advances, your equipment will become cheaper and more readily available. With that comes a drop in price or a decline in value. 

Machinery 

Many types of machinery will decline in value as they are used. Because of normal wear and tear on machines, they will decrease in value as they are used.

Software

Some software can be considered a depreciating asset because it can become obsolete only after one year. Things like tax software, account software, and others are all prime examples of depreciating assets. 

Furniture

Another common depreciating asset is any kind of furniture. This can be for a business or your home. 

How to Avoid Depreciating Assets?

It's easy to get tempted to purchase depreciating assets like a new car or furniture – but it's not a good use of your money. Below are some tips to help you avoid depreciating assets!

Plan How to Spend

To avoid depreciating assets, try to plan how you will spend your money. This means setting up a budget and sticking to it. It won't be easy – but it's certainly worth it.

Final Thoughts on Appreciating Assets

If you’re looking to make your money work for you, purchasing appreciating assets is essential. These assets will increase in value over time to grow your wealth and income. 

There are many types of appreciating assets with the most common being real estate, stocks, and savings accounts. 

There’s no need to invest in every asset. Pick ones that suit your goals and risk tolerance to start making money while you sleep. 

You don’t have to be an expert to start purchasing appreciating assets, either. Investing in stocks with Stash is a breeze, so what are you waiting for? Start growing your wealth today!

Do you have a favorite appreciating asset? Comment yours below!

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Forrest is a personal finance, entrepreneurship, and investing enthusiast dedicated to helping others obtain life long wealth. He owns several different blogs and is also passionate about health and fitness.