Investing doesn’t have to be intimidating and doesn’t require a finance degree to find some assets to increase your portfolio income.
If you’re looking to elevate your investments and build wealth, one smart move you can make is to purchase appreciating assets.
Appreciating assets are simply holding onto something you buy that goes up in value over time, like rental properties, stocks, and art pieces. Then you sell to gain a big profit!
In this blog post, we’ll explore the concept of appreciating assets, discuss some practical investment options, and share tips on how to make your money work harder for you.
I’ll talk about simple strategies that everyday investors like you and me can use to boost our net worth.
- Appreciating assets like real estate, stocks, and art don’t just keep up with inflation; they often come with handy tax benefits compared to things that lose value over time.
- Options like private equity, ETFs, and high-yield savings accounts each have risks, from daring to conservative, and can help your money grow while keeping some risks in check.
- You’ve got assets like cryptocurrencies, which can be like a rollercoaster, and then there are the steady ones like bonds and precious metals.
The Power of Appreciating Assets in Building Wealth
Appreciating assets are for anyone looking to grow wealth and achieve financial security. They are the opposite of those less appealing depreciating assets.
To build a resilient financial future, diversifying your investment portfolio is necessary. And that’s where appreciating assets shine.
They help you steadily grow your wealth and establish a rock-solid foundation for what lies ahead.
The Definition and Importance of Appreciating Assets
An appreciating asset is something you invest in that tends to increase in value over time.
This can include real estate, stocks, art, or other assets that have the potential to grow in worth as time goes on.
Take your home, for instance; it typically appreciates as the years go by. Similarly, the value of stocks tends to rise when the companies they represent do well.
Unlike depreciating assets that lose value, like your car, appreciating assets can help you build wealth, outpace inflation, and secure your financial future.
When you sell these assets, you often make a profit known as capital gains, typically taxed at a lower rate than regular income.
How Appreciating Assets Outpace Inflation
Appreciating assets have a remarkable ability to outpace inflation.
Unlike depreciating funds that can lose value over time due to rising living costs, these assets grow steadily, offering a reliable means to protect your wealth from inflation.
Here’s how they can outpace inflation:
- Value Growth: Appreciating assets, like real estate and stocks, tend to increase in value over time. They naturally keep up with or surpass the inflation rate when their worth rises.
- Capital Gains: When you eventually sell appreciating assets, you earn capital gains– AKA, the profit from the difference between what you paid for the asset and what you sell it for.
- Income Generation: Some appreciating assets, such as dividend-paying stocks or rental properties, generate regular income in addition to their value appreciation.
15 Best Appreciating Assets
Every investor has a wealth of choices, from traditional assets like real estate and stocks to more unique and alternative investments like art and wine.
Let’s look at the different appreciating assets examples:
1. Real Estate
Appreciating assets include real estate investments, which can be a key component of your financial portfolio.
These real estate assets offer the potential for both long-term appreciation and a sweet side gig through rental income.
Whether we’re talking about:
- Rental property like a single-family home or vacation house
- Multi-family apartments
- Big commercial real estate ventures
Here’s the best thing about real estate investing– it tends to be a bit more steady compared to the stock market.
You don’t get those wild rollercoaster rides in value. This stability can be a plus when adding financial assets to your portfolio.
There are ways to invest in real estate that don’t take thousands of dollars and hands-on property management.
Real Estate Investment Trusts (REITs) offer a low-risk way to generate passive income with real estate without dealing with the ups and downs of property ownership.
You can start investing in Real Estate Investment Trusts with platforms like Fundrise for a minimum investment as low as $10!
2. Exchange Traded Funds (ETFs)
ETFs, or Exchange Traded Funds, are essentially baskets of various assets, such as stocks, bonds, or commodities traded on stock exchanges.
Exchange-traded funds stand out because they offer a low-cost, diversified investment option, making them a smart choice for those seeking long-term growth.
Fractional shares in ETFs are a game changer for investors because a large initial investment is unnecessary.
It allows you to own a portion of an ETF even if you don’t have the funds to buy a full share, and you still get money when dividends come out.
One of the best places to buy exchange-traded funds is Betterment, a Robo-advisor who works to invest for you and grow your assets hands-off.
Betterment is a popular choice known for being user-friendly, which is great for both beginners and experienced investors.
3. Stock Market
Stocks are pretty popular when it comes to investing. They let you own a little slice of a company, and if it does well, you could profit from their success.
The cool thing about stock market investing is that you can see some nice returns with the right mix of research and spreading your investments around.
Plus, it’s easy to buy and sell them using an investment account on platforms like Robinhood, which is great if you need to get your hands on your cash.
Another way to invest in stocks is with private equity investing, meaning you can put your money into private companies that aren’t on the stock market.
This is usually a longer game, where you’re in it for the long haul, and it can potentially bring in some big returns and increase your net worth.
I suggest looking into both and using these stocks and more to diversify your assets and grow a stronger portfolio!
4. Your Own Business Ideas
Next, starting your own business could be a way to increase your income and bring in more money over time.
As your business starts to take off and become profitable, its value increases. Before you know it, you have a precious asset that can be added to your investment portfolio.
Then, if you decide to sell, you could make a lot of money that can set you up for retirement!
Starting and running a successful business also comes with its own set of risks and challenges. It’s like navigating uncharted waters and not always smooth sailing.
Entrepreneurship isn’t everyone’s cup of tea. It’s not a walk in the park and demands your time, effort, and determination.
But here’s the kicker: if you’re passionate about that idea and have the grit to make it flourish, this could be a good investment avenue.
Farmland might not be the first thing that comes to mind when considering appreciating assets or real estate investing, but it’s a solid contender.
You can get a steady cash flow through renting your real estate out. Plus, over time, the land’s value tends to increase.
If you want to invest in farmland but not be part of a group of owners, you could invest in real estate crowdfunding and put money into a farm to get payouts.
FarmTogether isn’t just another real estate investment option; it’s a fresh way to invest in farmland.
Unlike typical real estate investment trusts (REITs), FarmTogether offers investments where you can invest in an LLC owning farmland.
The starting point is just $15,000. But here’s a key thing to remember: you must be an accredited investor to jump into this real estate investing project.
6. High-Yield Savings Account
High-yield savings accounts are the way to go if you’re just starting or looking for a safer option to add wealth to your portfolio.
With interest rates that outpace traditional savings accounts, these investments can help you stay ahead of inflation and build your cash reserves.
While not traditionally considered an appreciating asset, high-yield savings accounts can provide a solid foundation for your financial portfolio.
High-yield savings accounts, like the ones on Acorns, offer:
- Higher interest rates than regular savings accounts
- Compound interest, which means your savings can grow faster over time
- A simple and safe way to grow wealth
- An ideal spot for emergency funds
7. Small Businesses
Investing in small businesses can be a great way to buy appreciating assets and boost your net worth.
Here’s how it works: You can get into venture capital or angel investing, putting your money into startups and early-stage companies.
It’s exciting, right? But remember that this road comes with its fair share of risks. Many startups don’t make it, so it’s a high-stakes game.
With high potential returns and appreciation, it’s an avenue worth exploring. But it’s a bit of a gamble to know what start-up will take off or not.
To invest in small businesses through crowdfunding platforms like Mainvest.
They let you invest in small businesses in exchange for company equity or other rewards.
Bonds can be a relatively safe option for investors seeking steady returns with less volatility.
Bonds are fixed-income investments that allow investors to lend money to companies or governments in exchange for interest payments and the return on their principal investment at maturity.
They offer steady, predictable returns and can provide diversification for a portfolio. However, they also carry risks such as default risk and interest rate risk.
When considering bond investments, investors should carefully consider factors such as credit ratings, bond duration, and the current interest rate environment.
9. Certificates of Deposit
Certificates of Deposit, or CDs, are another fixed-income investment that offers a guaranteed return on your money.
CDs can be suitable for low-risk investments with predictable returns and guaranteed principal investment.
They offer higher interest rates than traditional savings accounts and have FDIC insurance protection of up to $250,000.
However, like bonds, they also come with limitations, such as penalties for early withdrawal and the opportunity cost of potentially missing out on higher returns in the stock market.
10. Mutual Funds
Mutual funds can be an excellent option for those looking for a hands-off investing approach while diversifying their portfolio across different assets and industries.
They are a type of investment that pools money from numerous investors to purchase a diverse portfolio of assets such as stocks, bonds, and other securities.
Investors can choose from different types of mutual funds, including index funds, actively managed funds, and target-date funds.
11. Index Funds
Index funds are a popular choice for many investors, especially those looking for a straightforward way to grow their money over time in an appreciating asset.
Essentially, an index fund is a type of mutual fund or exchange-traded fund (ETF) designed to follow the performance of a specific market index, like the S&P 500 or the NASDAQ 100.
Webull is an online brokerage platform that offers a convenient way to invest in index funds, including those that track the NASDAQ 100.
Investing in fine art has become increasingly popular over the years, especially through platforms like Masterworks, with some pieces selling for millions of dollars.
While it may seem like a glamorous investment opportunity, these alternative investments also come with risks and challenges.
The value of fine art can be highly subjective and fluctuate greatly depending on market trends and individual tastes.
Additionally, alternative investments in art and collectibles may offer a different level of liquidity than other investments.
Fine wine isn’t just for connoisseurs. It’s also a fast-appreciating asset that offers stable returns.
According to Vinovest, wine investments have had a return of about 8% to 10% annually over the past 10 years!
Why not consider this unique investment opportunity?
The value of fine wine can be appreciated with age and rarity, making them attractive options for those looking for potential long-term gains.
However, the market for wine and whiskey is highly dependent on consumer trends and preferences, which can be unpredictable.
Investors should also consider the storage and insurance costs associated with these investments.
14. Precious Metals (Coins)
Precious metals are an interesting route to add alternative assets to your portfolio.
They’ve been valued for ages and are known for standing strong against inflation and market ups and downs.
Plus, they’re super liquid, meaning it’s pretty straightforward if you need to turn them into cash.
But diving into the world of precious metals isn’t something you do on a whim. You need to do your homework and get to know the different coins.
Cryptocurrencies are making waves in the investment world and have many fans getting in on the ground floor.
They offer a decentralized, secure alternative to traditional currencies. Plus, they come with the potential for some pretty high returns.
Platforms like Coinbase are making it easier and safer for people to dive into the world of crypto investing.
Cryptocurrencies are still a relatively new and volatile investment, so it’s always wise to do your research and understand the risks involved.
What are examples of appreciating assets?
Examples of appreciating assets include stocks, real estate, art and collectibles, wine and fine whiskey, precious metal coins, and cryptocurrencies.
These assets can increase in value over time and provide a return on investment.
Why do people want appreciating assets in their portfolios?
People buy appreciating assets because they offer the potential for long-term growth and financial stability.
They can also serve as a hedge against inflation and market volatility.
Additionally, certain appreciating assets can also provide a source of passive income. Some purchase commercial real estate, like a rental property, to generate a monthly income.
Why hold on to appreciating assets?
Holding on to appreciating assets can provide long-term financial stability and potential for appreciation.
Some people also enjoy owning tangible assets as a form of personal enjoyment or satisfaction.
It also provides tax benefits, as you can defer paying taxes on the increased value until you sell the asset.
Additionally, holding onto certain appreciating assets, such as real estate or dividend-paying stocks, can provide a source of passive income.
Is a business an appreciating asset?
A business can be an appreciating asset, but it’s not a guaranteed way to grow your money.
A business’s value depends on various factors, like its profitability, growth potential, the industry it’s in, and how well it’s managed.
For instance, a well-run business in a growing market could see its value increase significantly over the years.
This could be due to expanding customer base, increasing revenues, or even becoming an attractive target for acquisition by larger companies.
What assets have the best appreciation rates?
When it comes to assets with strong appreciation rates, a few key categories typically stand out.
- Real Estate: Often appreciates over time, influenced by location and developments.
- Stocks: Can offer significant appreciation but come with market volatility.
- Collectibles and Art: Potential for high appreciation but requires expertise and can be unpredictable
How long should you hold assets to get appreciation?
Holding assets for a long-term period is often recommended to maximize capital appreciation. Appreciating assets increase generally after around 5-10 years or more.
This applies to various assets, including stocks, real estate, and private equity investments. However, the ideal duration can vary based on the specific asset type and your investment objectives.
It’s always good to align your investment strategy with your personal goals and market dynamics.
Investing in appreciating assets is a pivotal strategy for achieving financial independence.
It’s an effective way to grow your net worth and boost your bank account, which is crucial in building long-term wealth.
Whether it’s real estate investing, stocks, or alternative investments like art and wine, these assets can significantly increase in value, helping you accumulate more money over time.
This approach is not just about short-term gains; it’s about securing your future with the best investments, especially when it comes to your retirement funds.