Wednesday, January 2, 2013

Financial Food for Thought (Appreciation-vs-Depreciation)

In the investment world, Appreciation means an increase or rise in the value of property, goods, etc. Things such as stocks, real estate, precious metals (gold and silver), etc. will normally appreciate over time.
Depreciation means a decrease in value due to wear and tear, decay, decline in price, etc. Things such as clothes, cars, etc. tend to depreciate over time.
  Cars, clothes, and a lot of other things that depreciate over time are usually common necessities, because we need clothes to protect us from the weather and we need cars to get us and our families around town. However, if you only buy things that depreciate (decrease in value), you will probably never become financially free. Instead you should also buy things that increase in value overtime such as stocks, real estate, precious metals, etc. which could also eventually start to produce enough income to set you financially free someday.
Edited by Reginald Forest

You might also like:
Financial Food for Thought (Efficiency)
Financial Food for Thought (Diversification)
Financial Food for Thought (Assets & Liabilities)
Financial Food for Thought (Good Debt-vs-Bad Debt)

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