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Appreciating assets, such as real estate and stocks, are assets that grow in value over time and can make a good investment for people looking to build retirement funds or overall wealth, provided the assets grow at a higher rate than inflation.
Real estate and stock market investments are excellent examples of appreciating assets whose value increases over time and returns typically outweigh the costs of inflation. Alternative assets, such as art, notes, and crowdfunded real estate, often don’t earn the most but they do provide diversified options that are often immune to market swings.
Keep reading to find out which appreciating assets are best for beginner investors or people on a budget, and to learn how to get started investing today.
What Type Of Investments Are Appreciating Assets?
Appreciating assets are investments such as real estate, stocks, cryptocurrency, gold, and fine art, that grow in value over the course of time.
Before you invest in appreciating assets, you’ll want to understand the full scope of value over time to ensure that the appreciation outweighs your time and expense plus the rising costs of inflation.
Good investments are appreciating assets whose annual return on investment beats the yearly rise in inflation.
Real estate, stocks, and alternative investments such as gold and art, are excellent examples of appreciating assets that can make good investments.
Average Historical Returns On Common Appreciating Assets
Appreciating assets is a must-have in the investing world, so that you can beat inflation and own something that continues to be valued in the future economy.
Here’s the typical average returns investors can hope to see with each appreciating asset:
- Alternative investments such as art and crypto earn slightly more than an average annual 5%.
- US commercial properties earn an average 10.6% annual return on investment, while REITS average an 11.8% annual return.
- Stock investments earn an average of roughly 10% a year, based on nearly 100 years of history.
When the economy causes inflation to soar like it did in 2022, real estate and stocks are often the only investments that continue to appreciate while also beating inflation.
How To Invest In Appreciating Assets
Online brokerage and investment firms make it easier and more affordable than ever to get started investing in appreciating assets.
You can invest in stocks, real estate, and alternative investments on nearly any budget, in many cases with very little minimum deposit required.
How To Invest In The Stock Market
More than half of the adults in the U.S. invest in the stock market, and it’s easy to understand why.
The stock market provides a lower-risk way to invest your money, and if you continually reinvest its profits over decades, the returns can be remarkable.
While stock market returns vary from one year to the next, they are impressively steady over time, paying an average 10% in returns (based on 100 years of S&P index history).
Average stock market returns adjusted for inflation:
After deducting annual inflation rates, stock market average returns typically continue to profit.
- 5-year average: 13.64% (2017 to 2021)
- 10-year average: 12.37% (2012 to 2021)
- 30 year average: 7.31% (1992 to 2021)
Did you know? 54% of investors prefer stock investing over real estate, and 60% prefer stocks to cryptocurrency.
In 2022, stock market average returns are far lower than usual (-15.43%), and this makes it an excellent time to get started investing since, in many cases, you can buy stocks at a lower price than usual.
Long-term investors who are willing to allow their stock investments to sit still during volatile economic times usually benefit from a high return on investment
To get started investing in the stock market, you need to go through a licensed professional called a “stock broker,” or use a “brokerage firm” that buys and sells assets on behalf of clients.
For most people, the easiest way to get started investing in stocks is through an online brokerage account.
Many online brokers allow you to invest in fractional shares of stocks, which means you can purchase a fraction of a share, often for as little as $1 worth.
For example, on M1 Finance you can invest in stocks for as little as $1.
There are no trading fees, sign-up fees, or commissions charged to investors, so you won’t get caught up in fees that eat into your profits.
M1 Finance allows you to invest in “portfolio pies,” which are visual pie charts that represent how you balance your stock investments.
Pies make investing simpler because you can choose from pre-set pies designed to meet your investing goals.
In addition, M1 Finance also allows you to set up auto-invest payments so that you can automatically invest a portion of each paycheck toward your stock investments.
Historically, the stock market is an excellent appreciating investment that offers a low-risk way to earn profitable long-term returns.
When paired with an online investment platform, stock investing is the perfect choice for beginners who prefer to learn as they go.
How To Invest In Real Estate
Real estate investing has a long history of making rich people richer, but today’s investing platforms make it available to almost anyone on any budget.
Online real estate investing platforms provide low-cost investing options and allow you to get started without an in-depth knowledge of the market.
There are three popular ways to invest in real estate:
Traditional Real Estate Investing
In traditional real estate investing, you save enough money to purchase your first property or a downpayment on it, then rent it out to tenants and earn profits from the rentals.
Many investors put their profits toward the purchase of another building, and another (and so on), to build great wealth.
With traditional real estate investing, if you wish to be a passive investor, you hire a team of professionals (including a real estate agent, contractors, and property manager) to manage the work for you.
The downside to traditional real estate investing is that it requires a great deal of money and knowledge to get started.
With this approach, you take a great personal risk that pays off if you succeed, but you can also lose a lot of money if you jump in too quickly or don’t understand the market well enough to make good buying and management decisions.
To get started in traditional real estate investing, you will need to:
- Save up enough money to purchase your first building
- Spend time learning about the industry so that you can make safe and profitable investments
Real Estate Investment Trusts (REITs)
When you buy into a REIT, you invest in a company that owns, operates, or finances real estate that produces income. REITs are legally required to distribute most of their earnings to investors.
Public REITs trade on the stock exchange, but private REITs do not.
And, public REITS typically pay out decent dividends and competitive long-term appreciation with returns similar to other stocks.
Crowdfunded Real Estate Investing
Crowdfunded real estate allows you to buy into a portfolio of properties with other people.
When you invest in crowdfunded real estate, you typically buy into dozens of properties and share the profits with other investors.
Crowdfunded real estate is a good option for people looking to generate passive income since the platform you choose does a lot (or all) of the research for you, and they also handle purchases, sales, rentals, and management of the properties.
Thanks to REITs and crowdfunded real estate investing, almost anyone on nearly any budget can get started investing in real estate, even without prior knowledge or experience.
To get started investing in crowdfunded real estate, you can use an app like Fundrise.
Fundrise brings together the best of both REITs and crowdfunded real estate since it’s a type of crowdfunding that offers eREIT (private) investments.
In 2021, Fundrise averaged a 22.99% average client return, outperforming ’s U.S. public REITS, the S & P 500, foreign stocks, and bonds.
Over time, Fundrise manages to deliver a high return on real estate investment for its average client.
To get started on Fundrise, visit the site and select an account level and plan, then start building your portfolio for as little as $10.
The Fundrise app helps you keep track of your investments wherever you go.
You can get started investing in crowdfunded real estate or REITs on nearly any budget and without much experience, however, if you’re interested in traditional real estate investing, the barriers are high — including saving a large amount of cash and learning the real estate market very well.
How To Get Started With Alternative Investments
Alternative investments are one of the fastest-growing fields in finance, largely because they provide an additional layer of diversification and are often completely unaffected by turbulence in other markets.
Alternative investments include assets such as art, structured notes, short term notes, and some types of real estate investments.
For example, Yieldstreet is an investment company that provides a wide range of crowdfunded, curated investments that provide options for investors wishing to generate passive income through a balanced portfolio of alternative assets.
On Yieldstreet, you can invest in portfolios that include corporate, commercial, consumer, and real estate assets.
Its Prism Fund allows anyone to get started investing for as low as $500, but all its other investments are limited to accredited investors (people earning more than $200,000/year or who have a net worth of more than one million dollars).
To get started investing in alternative assets with YieldStreet, you start with a very simple signup process that doesn’t require any personal information.
From there, the platform offers excellent guidance for beginners who want to learn more. Find out more about Yieldstreet here.
Alternative assets can be riskier than traditional investing in something like the stock market, however, they provide a way to diversify your investments and often remain steady through market swings.
Appreciating Assets – Which Is Right In The Long Run?
The best appreciating assets are the ones that provide steady returns that outweigh the annual cost of inflation.
Stock market investing is an excellent option for long-term investors willing to buy and hold stocks while continually reinvesting their dividends.
It’s also a great, lower-risk option for beginner investors wanting to learn more about investing over time.
Real estate investing is a good choice for people looking to generate passive income, and online platforms that provide REIT and crowdfunding options make it easy for beginners and everyday people to get started investing in real estate.
Alternative investments don't typically earn as much as stocks and real estate, and during turbulent inflation, as we have in 2022, they may not produce higher profits than inflation.
However, alternative investments can be an excellent way to diversify your investment portfolio with assets that don’t typically fluctuate when the other markets experience swings.
To get started investing in appreciating assets, consider using an online platform that allows you to start small and learn more as you go along.