How to Accumulate Appreciable Assets
You need to consider just two types of assets when thinking about a possible early retirement. The first type is the asset that appreciates. Appreciating assets are those properties that have increasing value over time. These properties are vital for an early retirement.
Personal property or property that depreciates is actually detrimental to accumulating appreciating assets. Cars, clothing, and furniture are depreciating assets. While it’s okay to invest in some, especially if you have a new home, buying them repeatedly isn’t a good idea.
Reduce consumption now
In the same way that “slow down now” works, it’s time to reduce consumption. We are not referring here to food and other basic products. We are talking here about buying clothes you don’t need, a new TV you don’t need, etc.
Arjuna Higgins of the Inter-Alliance Group states:
“Clean the house. If you want the best incentive to stop spending, clean your house. Go through every closet and cabinet and put everything on the counter. Take inventory. I don’t know about you, but I have a habit of buying things that I already have at home”.
“You know what I mean. You think you’ve run out of something because there’s so much clutter in your house that you can’t find anything. Every time I take inventory, it immediately kills any impulse to splurge. I realize that, I already have too many things”.
appreciating assets
What types of assets would be good for your financial future?
Liquid assets are basic. These assets are easily convertible to cash and have appreciable values since they are not used over time. Current accounts, savings accounts and money market accounts (in the UK) are considered liquid assets. Certificates of deposit are also a liquid asset. If you can’t invest in other sizable assets, at least keep your growing assets liquid. “Invest in savings” is the way to go. If you are having trouble saving on your own, ask someone to save for you.
If you have a regular monthly payroll account, have a certain percentage of your monthly income in an annuity account. You can start from as low as 3% to as high as 15%. It all depends on your current condition. Some people can save around 50% of their total income because they don’t have families. Some families are so thrifty that a 20% cut in their monthly budget does not affect them.
Another type of appreciable asset is the investment asset. Investment assets include stocks and bonds. Putting money in a mutual fund is also considered an investment asset. The beauty of investing assets is that you will be able to watch your money grow daily.
Real estate is another type of appreciable asset. Invest in land, because land is inherently scarce. Although the rental price may drop from period to period, land will always remain expensive. Invest in land whenever you can, so in the future you will be safe. In the United States, real estate is the largest source of money and wealth for most families. The more real estate you have, the more financially secure you will be.