Hey everyone! in this video of Investing for Beginners (Investing 101): The Power of Appreciation, I cover one of the fundamentals of investing. Appreciation.
Appreciation is essentially the increase in value of an asset or investment over time.
I cover a few specific examples of how appreciation in real estate can drastically affect your net worth and wealth over time.
The example I use in this video is that of a 30 year old working adult who lives in a city. I compare their net worth over time with 3 case studies.
1. The adult rents for most of their lives and never invests into real estate (or stocks) 2. The adult buys a house in a rough neighbourhood where appreciation is relatively stagnate 3. The adult buys a house in an upcoming neighbourhood with good appreciation
The effect speaks for itself as case 3 will likely become a millionaire. Case 2 will likely be middle class and somewhat well off. And Case 1 might be struggling and paycheque to paycheque.
Appreciation is one of the investment principles of the super rich as well. So it is important to understand.