An Investment Will Rise in Value
It’s important to understand that the value of an investment is expected appreciate or rise in value over time. It’s a tried and true sales technique to convince a buyer that what’s being sold is an investment when really, it may not be. Here’s the rule of thumb: If the item is expected to depreciate or lose value over time, it is a capital expenditure, not an investment.
That doesn’t mean there aren’t useful reasons to buy an expensive suit, a new car, or updated kitchen appliances. Those types of purchases will lose value over time, but they make life enjoyable or could even enhance a professional reputation (because in some industries clothes really do make the man). However, a buyer should know if they’re purchasing with the intent to make money in the long run, or if they’re splurging because they want to enjoy the utility of the item.
Examples of investments that one could expect to rise in value over time include corporate stocks, mutual funds, real estate (like raw land), and precious objects like art, jewels, or collectibles.
An Investment May Also Generate Income
Sometimes an investor is less interested in the capital appreciation of an investment and more concerned with the income potential it can provide. That doesn’t mean that income generating investments won’t rise in value over time (the most attractive investments do both).
Examples of income generating investments include corporate stocks that offer a dividend payment, bonds (corporate, government, or municipal), and real estate bought for rental income.
Most important, though, is how you can use an investment strategy to get what you want out of life, or to get where you want to go. Here’s how to use an investment strategy to build the life of your dreams. Read More