Assets That Appreciate in Value
Calculating your net worth is a great way for you to check up on your financial health. To calculate your net worth, you can subtract the sum of your liabilities from your total assets. If you own more than what you owe than you will have a positive net worth. However, if your liabilities exceed your assets, then you have a negative net worth. Your net worth changes over time, so it is important to regularly check your net worth as it reflects changes to your income or your saving and investing habits. If you’re looking to increase your net worth, you may want to consider investing in assets that appreciate over time. This way, you can expect to see your net worth increase over time.
Note that many of the below investments do not guarantee a return, so it is important to do your research to make sure you understand the risks and likelihood of the asset appreciating over time.
Here are common assets that can contribute to your net worth, we go over them in detail below
- Owning a house
- Diversified Portfolio
- Business Property
- Gold and Silver
Owning a House
Like most other people, your most valuable asset is probably your house. The value of your house has a huge impact on your net worth. One thing to take note of is that if you are still paying a mortgage on your home, then you must subtract the amount of the mortgage from the worth of your home.
If you own other properties, these can also be included in your net worth are any vacation homes and rental properties. If you paid in cash for any of these properties, then you can just add the amount that you paid in cash less any property taxes or insurance to your net worth.
Company stock investments sometimes referred to as “equities” are a very common way to invest. Investments in a company can be another portion of your overall net worth. The most common way to invest in companies is to buy a stock or an ETF/index fund that includes the companies you want, but this can also be in the form of a direct investment in a small business. Note, that investing in companies can be very risky and does not guarantee a return. However, if you do your research, and invest in companies for the long term, this can be a very solid strategy that will grow over time.
If you’re looking for another type of investment, you should look into buying land. As a physical asset, it usually does see its worth increase over time. Land is limited, which means that its value is hugely dependent upon supply and demand. If there is a great opportunity to purchase land and you have the cash you may want to invest in it.
Diversified Portfolio // Mutual Funds and ETFs
There are many types of investments that you can include in a diversified portfolio, but the most common are usually stocks, bonds, mutual funds, and ETFs. While a single stock may not be guaranteed to have a positive return, in the long run, having a diverse stock portfolio greatly increases your chances of a portfolio that will grow in value over time. Investing in stocks that are in a variety of industries is a good way to ensure that your portfolio is spread out enough to mitigate any chances of loss. However, it is important to keep in mind that most stocks never become big wins. So, the key to a growing portfolio is always to invest in a wide selection, rather than betting your money on a few stocks in a few industries. Also, if you have any retirement plans, these can contribute to your net worth as well.
Having business properties are another asset that becomes very valuable over time. Tenants who rent out the space for commercial business use, which is a great way for you cover a mortgage on the property if you have one, and any other property related expenses.
Gold and Silver
Gold and silver have historically seen an increase in value. Many investors exchange their cash for either of these, however it is only a good choice for those who are willing to let their investment grow over the years, since the increase in value is very slow. If you think you are patient enough to wait for prices to go up, then this might be a great asset for you.