You might want to increase your net worth in order to create a secure financial future.
Appreciating assets can help you build up your value over time.
Some of the examples below will require little effort from you. The power of time, and the performance of the financial markets can help you build a large net worth.
There is no guarantee that any asset purchased or invested in will grow significantly.
These assets can help you to build wealth.
Table of Contents
Net Worth Definition
Appreciating Asset Definition
Appreciating assets to build your net worth
Net Worth Definition
Your net worth is equal to the sum of the current value of your non-financial assets and financial assets, minus any outstanding liabilities. Your net worth will grow faster if you have more assets that appreciate and less debt.
Personal Capital is a simple tool that allows you to track your budget, investments and net worth.
Appreciating Asset Definition
Appreciating assets are those that increase in value over time. These assets can increase your networth and diversify your investment portfolio. There is no guarantee of price appreciation, and these assets may even lose value at times.
Appreciating assets to build your net worth
Appreciating assets are a great way to build wealth, and not only temporary riches. To take your finances to the top, investing is a key aspect.
What are the best assets to invest in?
You may be interested in some assets, while others you might want to avoid. You can choose what you want to invest in based on your financial goals.
List of Appreciating Assets
Real estate
Real Estate Investment Trust (REIT)
Stocks
Bonds
Private Equity
Certificates of deposit (CDs)
Savings Accounts
Commodities
Collectibles
Start A Business
Below, I will go into more detail about each one!
- Real Estate
Real estate is one of the assets that has helped many people build wealth. Real estate can take the form of single family homes, multifamily homes or commercial properties like office buildings. It could also be land, farmland, or even a commercial building.
This will usually mean that you are investing in the long term and renting out your properties or listing them on websites like Airbnb. You can also buy homes to rehab and sell for profit.
The goal of real estate as an asset that appreciates is to hold it long-term so that the value will increase significantly years later.
Real estate does tend to appreciate with time, but there are still many risks. In 2008, there was a real estate bubble which caused a lot of depreciation in the market and foreclosures.
Real estate is not 100% guaranteed to recover.
You can learn more about investing in real estate. These are the best real estate investment books to read in 2018.
- Real Estate Investment Trusts (REITs)
To be successful in traditional real estate, you will need to have a lot of knowledge, money, effort, and time. This statement isn’t meant to scare anyone away. It just means that you might not be ready to get started yet.
You can get real estate exposure through Real Estate Investment Trusts, or REITs as they are commonly known.
A REIT is a pool of funds that can be used to buy and sell real estate. These income-producing funds provide investors with a regular stream of dividends, usually from commercial property and apartment buildings.
You can invest in commercial real estate without as much risk, compared to investing directly in a property.
You can also invest in REITs through Vanguard’s VNQ index fund or VNQ ETF. You can also look at real estate crowdfunding platforms such as Fundrise, DiversyFund or Groundfloor.
- Stocks
Investing in stocks is a great way to increase the value of your assets. Stocks are a way to own a company and earn dividends, as well as increase the value of your shares over time.
As a shareholder, you may even be able to vote on the company’s initiatives and other decisions. It’s kind of cool, isn’t it?
Investing in stocks can be difficult because no one knows for sure which companies will succeed and how much (or if any) they will grow. ).
There are many predictions, and there are people who can select quality companies. But it is impossible to predict how much a stock will increase.
Smart investors use index funds or ETFs to diversify their exposure across multiple companies.
You can lower your risk by owning a small piece of hundreds, or even thousands of different companies. Vanguard Index Funds are my favorite, but you have many options to choose from.
If you want to invest in individual stocks, make sure it is a small portion of your overall portfolio. Also, do thorough research. Consider using Morningstar and The Motley Fool as a guide to your investment decisions if investing in individual stocks is something that interests you.
- Bonds
Bonds are also a part of investing in stocks. It’s up to you whether or not you want to invest in bonds.
Bonds are a good way to balance your portfolio and help you avoid the riskier stocks.
What is a bond, then?
Bonds are a type of debt you can buy as mutual funds, or privately by loaning money to a government or company. You will receive interest as the investor on your loan. Bonds also have a maturity date that can range anywhere from one to 10 years into the future. The bond is fully repaid once the maturity date has been reached.
We won’t get into detail here, but there are many different types of bonds. Some of the bonds include Treasury Bonds, corporate bonds, and municipal bonds.
- Private Equity
Private equity is when you invest in and own a business. The goal is to get a percentage of the profits, and possibly a lump sum payment if you ever sell the business.
This will usually require that you are an accredited investor, or venture capitalist. Private equity requires a large amount of money.
You can also get involved in the action by visiting sites like IndieGoGo and AngelList.
Private equity is the most risky of all of these assets.
While investing in one’s own business is a good idea, it can be difficult to invest in new businesses or start-ups. As mentioned above, this can involve much higher amounts of capital without any guarantee of appreciation.
Private equity, however, can be a great way to build your wealth and increase your returns in the long run.
- Certificates of Deposit (CDs)
Certificates of Deposit, or CDs for short, are another example of an asset that could be of interest to you.
They are similar in that they have a low-risk, and a much lower risk of losing money than stocks or real estate. You can expect lower returns.
You can buy CDs through your bank, or any online bank that you are interested in. FDIC insurance should cover your CD up to $250,000 You get extra protection in the bank if your bank ever goes under.
A CD is a deposit of money in a bank that will be held for a set period (usually called the term) and pay an interest rate fixed until the end of the term. When the maturity date comes, you will receive the money you deposited and the interest.
Also, CDs can be purchased with varying terms and minimum balances. The higher the interest rate, the longer you keep the CD, and the more you deposit.
It’s not too bad, is it?
Investors who want to diversify their CDs while reducing risk can use a technique called a CD Ladder.
CDs also carry risks. CDs will do better when rates of interest are high. This is because CDs lose value when inflation rates increase.
- Savings Accounts
In general, if your bank is a good one, you have a savings account. You might be surprised to find this account on the list.
Even if you have a low interest rate on your account, this is still an asset that will appreciate.
Savings accounts are one of the best investments you can make. Many banks offer interest rates that are fractions of a percent. They aren’t keeping up with inflation rates!
You can also look for high-yielding savings accounts, which typically offer interest rates between 1-3%. If the economy is in a slump, these percentages may dip and then rise.
Savings accounts are where you should put your emergency fund, plus extra money for unexpected expenses, such as bills or job losses.
Savings accounts are not something I consider to be an asset that will appreciate, but they can certainly do so for you.
- Commodities
Commodities are another investment that may not be as well-known as others, but is just as important.
This is a broad category that contains a lot of assets with high appreciation potential. It can also be used to diversify your portfolio.
Commodities include grains, silver and gold, beef, natural gas, oil and petroleum. The price of these items will fluctuate, making them a risky investment. Over time, these items have the potential to be strong assets that appreciate.
There are several ways for most investors to invest in commodities. Some brokerage firms offer a variety of commodities ETFs that come in different sub-categories. Not all brokerages provide these funds. You’ll have to check with your current financial institution if it has any.
You can also buy individual stocks of companies that fall under the commodities category. Some people choose to buy commodities directly like gold, silver or platinum bullions and coins.
- Collectors’ Items
If you know where to look and when to invest, collector’s items are a great asset.
Investing in collectibles is one of the most challenging investments to make. The value of the item in the future could be worth a lot.
Here are some common categories of collector’s goods that make good investments.
Classic and vintage vehicles
Classic cars, while they are usually depreciating investments, can be a good investment if you know where to look and what’s in demand. Prices are affected by many factors, including the brand, the age and condition of a car, as well as supply and demand.
Fine art
Art to invest in is not only expensive when it comes from a famous artist, but it can also be speculative if the artist is new. You can’t predict which new artists will be successful in the future, and you might need a lot of money to buy a famous piece.
Masterworks, however, is a company that allows you to buy art by Van Gogh and Claude Monet as well as Andy Warhol or other famous artists.
Wine
Wine is a popular beverage, but can also increase in value. There are many factors that can affect the value of a wine.
Vinovest is a platform that allows you to invest in wine without having to physically buy it. You can choose a portfolio of wine bottles selected by experts and have them physically stored for you.
Other
You can also find coins, stamps and sports trading cards in this category. While owning physical collectibles is popular, financial technology continues to make investment easier.
You can also invest in collectibles on other platforms such as RallyRD or Mythic Markets
- Start A Business
It can be stressful and time-consuming to start your own business. You may also need some capital up front. Even with good execution, you can fail.
Starting a business is a great way to create FU, increase your net worth and build a future asset that will appreciate in value.
There are many businesses that you can start online, with lower initial costs but which can increase your income significantly.
It’s understandable that not everyone is interested in becoming an entrepreneur. But think of the many millionaires and even billionaires who didn’t come from a family with wealth.
Some become wealthy by selling their company years later or through the results of their own business. Multiple streams of income are where wealth will be built, but a successful business can also help.
This website, for example, is my side business. I work on it a few hours per week. The site generates 14 times more revenue than the initial start-up cost.
The site is only a little over two years old, but I can still sell it for a good amount. Plus, I can write about something that I am passionate about and help others.
