Wouldn’t it be great if your investments always made money? Imagine the financial confidence you would have.
“No matter what happens to the economy, I’ll make profits.”
Believe it or not, these things exist. Although there aren’t direct ways to do it. Otherwise, everyone would do it.
So what’s the short answer?
Yes. Almost any investment will increase in value over time as long as:
- It has real, intrinsic value
- You researched properly
- You invest for the long term
If you want to make money in the short term, there are two ways:
- Get big returns by increasing your risk of losing money
- Lower your returns to avoid losing any money
At least financially, there is no way to do it fast and easy.
Things that Appreciate in Value Indefinitely: Pipe Dream or Realistic?
Let’s start by setting the right expectations. We don’t know any riskless system to double your money overnight. Things can go down as fast as they can go up.
We say something always appreciates in value, we refer to the intrinsic value. You never know what people will pay for it. But if an asset has enough reasons to grow in the future, you can be sure it will regardless of the public preferences.
The closest you can get to this concept is by minimizing risk. But by doing that, you’re also lowering your reward.
What can we do then? You can invest in whatever is growing the most right now.
But as you’ll see, it’s not difficult to find “things that appreciate in value.” What’s hard is finding something that always does it. To put it simply, you will always make a positive ROI if you always time the market right (which is impossible).
BUT if you win more often than you lose, you could say your assets are increasing in value. Understand that in order to always grow, you may need to lose some money upfront. That’s what most strategies are about.
You may or may not agree with the assets we’re going to share. But before you find by yourself what investments are worth it, let’s define what value means.
Because, unlike what the market wants you to believe, it’s a very objective concept.
What makes something valuable?
Keep in mind that nobody has a universal system to measure the value of a company. But there are some clues you can use to know whether it will appreciate or depreciate.
I can guarantee you every business will have some value. Because before an entrepreneur starts a company, one must ask oneself: “What value am I providing to my clients?”
The CENTS Rule can give us a better idea of what your investment is worth:
- CONTROL: Do you control your investment, or do you depend on some other party? Some models that fail this condition are affiliate programs, trading exchanges, and e-commerce. Make sure you control everything about your assets, customer base (if any), and funds.
Otherwise, whoever has control can just shut down the operations and leave you with nothing.
- ENTRY: How easy is it to invest here and make money? If anybody can do it, you won’t earn much. Or it won’t be long before it stops working.
Imagine you sign up for a company that knows how to beat the general market. If everyone in the market joins this company, they would be eventually trading against themselves, which reduces their returns.
Don’t get it wrong. Anybody-can-do-it is what kills most investments. It’s NOT a benefit.
- NEED: What problem does the company solve? Your investment becomes more valuable as the market demand increases. For that to happen, it must solve a problem that’s big, common, and hard to solve.
If you can’t justify why a business exists (other than making you money), it won’t last long.
- TIME: Can you invest your money without investing your time? You may need to work on your system at the beginning. But once it’s running, it should take almost no maintenance work. Otherwise, you’re trading times for dollars, which isn’t very valuable.
- SCALE: What’s the potential market you can reach? Can you make customers pay more? Can the same buyers buy from you again? A software monthly subscription, for example, is more scalable than selling a property.
Oftentimes, people expect companies to be worth more money after they make major updates. But those updates are meaningless if they don’t affect these five factors in some way. Ask yourself how your asset will look like in the future:
- Will I have more control, or will I lose it?
- Will it become harder to invest here, or will it attract more beginners?
- Will this asset keep being relevant in the future?
- How much passive income can I expect to make once I set it up?
- Is the market growing?
A growing market will likely increase your assets in value because more people are joining. But first, make sure it has grown enough to be relevant.
By contrast, many projects grow fast at the beginning. But without proper market demand, they end up forgotten.
Usable VS Exchange Value
If you Google “things that increase in value,” most blogs will talk about Forex, crypto, gold, and stocks. It’s a proven way to make money (Exchange value).
However, there are only as valuable as we want them to be. If we decided too stop using them— or we find a better currency— the original one could fall in price overnight.
Rarity helps to counter inflation and keep currencies valuable. But adoption matters more than scarcity. If you look at crypto-currencies, for example, there are thousands of them, most of which launched right after the Bitcoin boom of 2017.
Today, almost nobody remembers them.
Even the most popular currencies can lose value, whether it’s Bitcoin, the dollar, or the Euro.
And when the only purpose of an asset is to exchange currencies, its intrinsic value is near zero.
By contrast, Usable Value remains valuable as long as people keep using it. That’s what businesses are about: solving problems.
The good news is, we never run out of problems, so there are always market opportunities. But in order to be useful, the solution must help with a problem that’s:
- Hard to solve
- Widely common
It can be as simple as food/shelter or as abstract as education/social services.
Usable value can still lower, for example, when too many sellers supply the same product.
So which one is better, usable or exchange value? Usable value wins, but it’s better to have both.
Cryptocurrencies are a good example of this. The most successful altcoins started as tech-projects designed to solve a problem in an industry (e.g., coding apps, transaction speed, financial security…).
They fundament like any other SaaS business (software as a service). But instead of paying with fiat, they use their own currency to run the software. For example, you create any tech-project when programming in the Ethereum Network. But you need to buy ETH tokens to execute the code.
All in all, any asset has both features as long as you can sell it (exchange) and it solves a market need (usable):
- You can sell real estate, and you can rent it
- You can help customers with a business, but you can also exit the company
- You can lend money and get it back later with accrued interest
Loans are an exception. While you’re only trading exchange value, lending counts as a service [usable]. Depending on the borrower’s credit score, you could guarantee yourself a positive return. And if you invest in AAA+ Treasury Bonds, you won’t even lose money on inflation.
Antiques: Appreciating Assets That Aren’t Stocks
We started with services because it’s the easiest way to explain the value concept. But value can also represent the rarity of an item. Antiques are the best example of this.
Have you ever wondered why people spend millions on antiques?
- It’s not because they’re usable. Most of them are decoratives/miscellaneous/collectives.
- It’s not because they’re exchangeable. Collectors look for very specific items, so the market/liquidity is minimum.
It’s because their value is well-protected.
- Rarity. How many people have them?
- Detail. How hard is it to replicate?
- Condition. How well have they endured time?
Typically, antiques become rarer over the years. These are the only assets that become more valuable because of time. Because they are hard to replicate, that protects them from inflation and fraud.
Those who buy them know that they can sell them for much more in the future. And this realization, at the same time, boosts the price of an antique. It’s why people can bid more than the item is worth.
But antiques have a few downsides:
- You don’t control how many people have the item.
Suppose people realize that rare antiques become valuable. If everybody started to keep these items or produce more of them, that ironically reduces their value.
- They’re not liquid.
You’re going to spend a lot of money on traveling and advertising to find the right buyer. Anybody will accept a dollar bill, but when it comes to antiques, maybe 50 people in the whole world are interested. And maybe they can’t afford it.
- They are slow.
You can indeed wait until your item becomes more scarce. But in order to get a decent return, that may mean waiting hundreds of years.
The ROI isn’t very high, and you won’t be around by the time you want to sell.
Fast Ways to Increase the Value of Your Money
No matter what you own, almost everything has some intrinsic and extrinsic value. Intrinsic is what it costs to produce something, while the extrinsic value is what others are willing to pay.
Although nobody knows the exact intrinsic value, everybody has a vague idea of what it should be worth. You can see it in a sideways market, where prices oscillate between lows and highs. The intrinsic price must be somewhere between those points.
If you can pay only for the intrinsic value, you can guarantee others will pay some extrinsic value from it.
Businesses do it all the time. Let’s say buying one product costs $20, which is expensive. But if you buy 500, it costs you $10 each instead. If you sell it for $15, you’re earning $5 per sale and solving a problem.
Sometimes, people will pay more than $20, sometimes it may be under $10 (although it’s very rare). But if you pay exactly what it’s worth or less, you’ll never lose.
When trading stocks and other securities, you never know what the asset is worth. Prices change all the time: some believe it’s about to skyrocket, and others believe it’s about to crash.
Regardless of your price-prediction strategies, you can get the best deal if you use the VWAP variable when trading. This relation simply shows you the average price most people have bought and the trading volume.
If you want to buy and trade below the VWAP, you’ll most likely sell for higher. Because other people bought for higher, they will wait for longer to sell. If you sell right or above the VWAP indicator, you already made profits.
In general, assets are more likely to increase in value if you invest time as well:
- You buy a property, work on a restoration, and re-sell it
- Active investors manage the companies where they invest to increase the chance of positive returns
- If you dedicate more time to research, you’re less likely to lose money on mistakes
You can find assets that appreciate in value, but they will likely sacrifice some other variable:
- You may need to work more
- It may take longer than you think
- There’s a chance you lose your money
As much as we wished investments to be easy, that would go against the CENTS rule (Entry barrier), so it leads to the opposite effect.
As for risk, you’re never truly “risk-free” unless you take control of your investments. Only you can own your time, your money, and yourself. So we recommend that’s the first place where you invest.
- You can invest in yourself, which is an indirect way to increase your potential net worth. It’s not all about the investments, but the person who manages them, your knowledge, and risk-reward preference.
If you know a skill will always be in high demand, you can learn that skill. What you learn will never decrease in value, which means it can only appreciate. The more you learn, the more you’re worth for your clients.
But we all know developing skills takes time and is uncomfortable. If you look for something more efficient, the best you can do is use your money the right way. Specifically, invest your money to whatever produced that money:
- If you work in a job, pay for more training so you can get a promotion
- If you make revenue from your business, reinvest back into that system
- If you earn returns via compound interest, keep investing in those securities
There’s no perfect way to invest your money so that it always increases its value. I can only guarantee you it will depreciate IF you keep it in your bank account. Put your dollars to work.