Smart Money: 5 Items That Depreciate Quick

depreciating assets

Deciding where we spend our money is a complicated process. Aside from the usual consideration of what we want as opposed to what we need, we must also think about depreciation when we make purchases. Some of the things we buy can increase in value over time, but this is not true of all things. In fact, many of the most expensive things you’ll spend your hard-earned money on will actually depreciate. Consider these 5 common items that depreciate quickly, and consider this reality when making purchases.

  1. Cars
    In most cases, buying a car is not the smartest decision that a buyer can make. The reason for this is depreciation. As soon as you drive a new car off the lot, its value has decreased significantly. Every subsequent mile driven in the car further adds to the depreciation. By the time you need to replace your car, it will be worth a fraction of its original value. Used cars last just as long and reduce the impact of depreciation by giving you a lower price from the start.
  2. Computers
    One of the quickest depreciating items of all is the personal computer. Every year, more advanced computers hit the market. They’re constantly getting smaller, faster, smarter, and more powerful. The computer you buy today will most likely be on the market at half of today’s price within a year’s time. Some people have tried to combat this problem by building their own computers that can be upgraded over time, but for most the best course of action is to take good care of your computers and extend their life as much as possible.
  3. Pocket Electronics
    Smart phones, MP3 players, and any number of other devices depreciate even quicker than computers. In fact, while MP3 players were once a popular item for portable music listening, they’ve been surpassed almost entirely by high capacity smart phones. Major electronics companies are constantly working around the clock on research and development to one-up each other with the next phone, which makes them hit the market so fast that most people can’t keep track of them. Of course, as soon as the new model hits shelves, the old one is practically a giveaway.
  4. Textbooks
    This is an important one for college students. Textbooks depreciate so fast that it’ll make your head spin. Anyone who’s ever tried to resell a textbook at the end of a semester knows this sorrow. College texts are constantly being printed in new editions, often with very little added to the text, which makes them lose their value almost immediately. Students can actually use this to their advantage by buying previous editions of textbooks for their classes.
  5. Sports Equipment
    Any sports lover, from skiing to cycling, will tell you the same story about sporting goods depreciation. Your local Craigslist or California classifieds can corroborate the story. As soon as sporting equipment is used once by the owner, its value is practically cut in half. A bicycle in good condition that retails for $1500 will rarely fetch more than $800 on the used market. Combat this unfortunate reality by getting the most mileage out of your equipment and resisting the upgrade bug.

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