The 4 categories of assets:
Not all assets are created equally!
Before you make an investment, ask these questions:
1: Does this asset produce income?
If yes, it's a productive asset.
If no, it's an unproductive asset.
2: What will lhappen to the value of this asset in the future?
If it is likely to increase in value, that's an appreciating asset.
If it is likely to lose in value, that's a depreciation asset.
Now that we have the two big questions answered, we know which quadrant the asset belongs in.
To destroy wealth, buy unproductive assets that depreciate.
To build wealth, buy productive assets that appreciate.
It really is that simple.
Which asset type do you like best?
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ZnWC : Thanks for sharing. It is difficult to define what is a "productive' asset. For stocks and real estate investment, there's volatility risk and may slip into loss (book value) in the short term. It's still questionable if we can consider crypto an asset because it has no intrinsic value nor is backed by any anything. Some said invest in your upgrading and education because talent and skill are the greatest asset.
BrianjhOP ZnWC: yes, upgrading is crucial for personal development and could return asymmetric returns, but it's not usually under any form of assets. Hence, I didn't include it. If I have to include things like health as an asset, etc.