12 Appreciating Assets to Build Wealth

Imagine two people who are 30 years old, each of whom makes $75,000 per year and spends $50,000 of it.

Person A takes their $25,000 in savings every year and leaves it in their bank account. After 30 years, they'll have $750,000 in savings. Not bad.

Person B takes their $25,000 each year and invests it in a number of assets that grow by an average of 5% per year. After 30 years, they will have $1,768,750.

This is the power of consistently investing in appreciating assets.

What is an appreciating asset?

An appreciating asset is one that increases in value over time.

For example, you may buy a house for $400,000 today that is worth $600,000 in 20 years. In this instance, the house has “appreciated” in value by $200,000.

Summary of the best appreciating assets

There are many appreciating assets to choose from. Some entail higher risk and typically generate higher returns, while others are more stable and predictable but usually have lower returns.

Here's our list of the 12 best appreciating assets:

1. Real estate
2. Stocks & ETFs
3. Art
4. Cash equivalents
5. Private equity
6. Cryptocurrency
7. Precious metals
8. Other commodities
9. Other alternatives
10. Wine
11. Jewelry
12. Other collectibles
    

Keep reading for more information on each of these assets, including how to invest in each one and how much you can expect to earn.

The 12 best appreciating assets

1. Real estate

For most people in the U.S., their home is the single biggest investment they'll make during their lives. It's also one of the most reliable appreciating assets.

In a 2017 study, a group of economists found that the annual return on housing in 16 now-wealthy countries (such as the U.S., Germany, and Japan) was more than 7% after accounting for inflation between the years 1870 and 2015.

Housing was also significantly more stable than equities over the period studied.

While owning your home might be the most common way people invest in real estate, it's not the only way. You can also buy rental properties.

Rental properties offer several benefits, such as monthly income, price appreciation, and tax benefits. Each of these helps bolster returns.

But they also come with a lot of work.

Real estate investors have to find, buy, fix, rent, and maintain their properties. They also have to come up with a 20–25% down payment.

Or, you can use a real estate crowdfunding platform. These companies pool investors' money together and do all of the work for you. All that's left to do is collect rental income and watch the homes you've invested in appreciate.

Two of my most recommended platforms for real estate investing are Fundrise and Arrived.

Fundrise focuses on both commercial and residential real estate and allows investors to get started with just $10, while Arrived only invests in single-family homes and has a minimum investment of $100.

2. Stocks & index funds

You can own small stakes in the biggest and best companies in the world by investing in the stock market.

Historically speaking, stocks have been one of the greatest wealth-generating investments and are accessible to almost anyone. 

While they're more volatile than real estate, the returns have been worth it:

Source: First Tuesday Journal

In the study mentioned above, since 1980, the annual return on equities in the 16 countries studied was 10.7%, compared to a more modest 6.4% for housing.

Yet, while stocks have the opportunity to appreciate quickly, buying individual stocks can be risky. You're likely better off spreading your risk by owning several stocks. This is known as diversification.

For easy diversification, you may want to invest in an index fund. An index fund is an investment that holds a basket of stocks that share a geography, size, or other characteristic.

For example, VOO is an index fund that tracks the S&P 500 index, a list of 500 of the largest companies in the U.S. By buying VOO, you're investing in all 500 companies.

You should expect frequent downturns in the stock market, but given a long enough time horizon, stocks consistently appreciate in value.

You can invest in stocks and ETFs on Public.

3. Art

Another popular appreciating asset, and one that has been an investment class for hundreds of years, is fine art.

Because investment-grade artworks sell for hundreds of thousands or millions of dollars, this asset used to be exclusively for the ultra-wealthy. 

Now, on a platform called Masterworks, anyone can buy fractional shares of artwork with just $10.

Masterworks focuses on Post-War and Contemporary art. From 1995 through 2022, these categories averaged 12.6% per year:

Source: Masterworks

That's 3.6% higher than the S&P 500 over the same period.

Additionally, art has served as a hedge against inflation and, because of its low correlation with traditional markets, a way to diversify a portfolio.

Masterworks sources, acquires, and makes shares of each artwork available on its platform.

After buying shares, members can sell their shares on the platform's secondary marketplace (subject to liquidity) or hold their shares until the company sells the artwork (usually 3–10 years later).

For more information on Masterworks, check out our full Masterworks Review.

4. Cash equivalents

While cash itself loses its value over time because of inflation, you can invest in cash equivalents, which slightly outpace inflation.

Cash equivalents generate interest, which you can reinvest and earn a higher amount of interest on in the subsequent period. This creates a flywheel effect, simulating the effects of owning an appreciating asset.

Examples of cash equivalents are high-yield savings accounts (HYSAs), money market funds (MMFs), certificates of deposit (CDs), and Treasury bills (my personal favorite).

Each of these investments is FDIC-insured and can quickly and easily be converted into cash.

Any cash you have saved for an emergency fund or upcoming purchase can be invested in these assets. Public gives all of its users access to a HYSA (which is currently paying 4.6%) along with their brokerage account.

I put all of my cash into my brokerage account and invest it in SGOV, an ETF that owns Treasury bills.

5. Private equity

Back in the 1990s and early 2000s, tech companies like Google (GOOGL) and Amazon (AMZN) went public relatively early in their growth cycles.

Nowadays, with the rise of private equity, private companies are able to stay private for longer. This results in venture capital firms earning outsized returns:

Source: Fundrise

While private equity used to be heavily gated, it's becoming increasingly accessible thanks to new platforms like Hiive and Fundrise.

Accredited investors can buy shares of pre-IPO companies on Hiive. There are over 2,000 private companies on Hiive, including Stripe, OpenAI, and Epic Games.

Retail investors can invest in Fundrise's Innovation Fund, a venture capital fund that invests in artificial intelligence, machine learning, and data infrastructure companies.

Some of the fund's holdings include Anthropic, Anduril, Databricks, and Canva.

6. Cryptocurrency

Bitcoin, ethereum, and a number of other cryptocurrencies have become increasingly popular investments during the last 10 years.

The crypto market is wildly volatile, which can lead to both big gains and big losses. Here's a look at the year-over-year performance of bitcoin:

• 2012: 189%
• 2013: 5,429%
• 2014: -56%
• 2015: 34%
• 2016: 124%
• 2017: 1,336%
• 2018: -73%
• 2019: 94%
• 2020: 304%
• 2021: 59%
• 2022: -64%
• 2023: 156%

Remember, despite the vast majority of these years being positive, each of the large downturns wiped out a significant amount of the run-up.

For example, after beginning 2019 near $3,700, bitcoin reached a peak of $64,400 in 2021. However, its 62% loss in 2022 sent it all the way back down to $16,900 per coin, wiping out billions of dollars in the process.

Even if you're very bullish on bitcoin (or another coin), you probably shouldn't invest more than 5–10% of your portfolio in crypto.

Many brokerages, including Public, allow you to buy cryptocurrency from your brokerage account.

7. Precious metals

Gold, silver, platinum, and other precious metals have been a store of value for thousands of years and are still a go-to investment during tough economic conditions.

Many investment strategies, like Ray Dalio's All Weather Portfolio, include an allocation to gold. In Dalio's portfolio, gold is used primarily as an inflation hedge and to provide some stability when stock prices are falling.

The easiest way to invest in precious metals is by buying ETFs in your brokerage account. For example, you can invest in gold by buying GLD or silver with SIVR. 

Precious metals are the most popular commodity to invest in, but there are others.

8. Other commodities

A commodity investment is an investment in a physical, raw material or agricultural product.

The most common commodities are:

• Metals: Gold, silver, copper, platinum, and iron
• Energy: Oil, natural gas, and coal
• Agriculture: Wheat, coffee, and orange juice
• Livestock: Pork and cattle

Investors buy commodities to hedge against inflation and enhance their portfolio's diversification.

However, the performance of commodities varies widely from year to year, as seen in the turquoise squares below:

Source: A Wealth of Common Sense

While commodities often lag many other assets, they often outperform during years when the stock market struggles. For example, when large-cap stocks were down 18.2% in 2022, commodities were up 17.5%.

Commodities are also used for speculative purposes and to make bets on global economic trends. For example, if you expect gas prices to rise, you may invest in crude oil.

These investments can be hard to store in the real world, so many investors choose to invest in commodity ETFs (such as DJP, USO, GLTR, and MOO).

You can buy these funds in your regular brokerage account.

9. Other alternatives

Any financial asset that does not fall into one of the traditional categories (stocks, bonds, and cash) is considered an alternative investment.

In addition to those included on this list, other alternative investments include hedge funds, private notes, private credit, and more.

By adding alternatives to a portfolio of traditional investments, investors may be able to reduce their portfolio's volatility:

Source: Yieldstreet

Additionally, alternatives may increase a portfolio's returns — though this will depend on the period you measure:

Source: Yieldstreet

Yieldstreet is an investment platform that offers access to 10 different alternative asset classes. Investable assets include real estate projects, venture capital and private equity, art, private credit, and more.

It also offers the Alternative Income Fund, which allows anyone to invest in a diversified set of alternatives with a single investment. The fund has investments in 20 different asset classes, including real estate, venture capital, private equity, and art.

10. Wine

Fine wine is also an investment class.

Between 2000–2018, wine outperformed the S&P 500:

Source: Vinovest

As an asset class, wine has generated 10.6% annualized returns over the last 30 years.

There are several factors that drive wine prices:

• Scarcity: Wineries often make investment-grade wines in limited quantities, a number that can only decrease in time as people drink the wine.
• Brand: The most prestigious wineries often command over $100,000 for a single bottle.
• Age: Wine becomes more flavorful with time.
  

Similar to investing in art, you'll want to partner with an expert if you're interested in building a wine portfolio. For this, I recommend Vinovest.

Vinovest is a wine (and whiskey) investment platform that sources, purchases, insures, and stores all the bottles in your portfolio (unless you want to store them yourself).

Leveraging their investment models, Vinovest's team of master sommeliers evaluates wine and determines which ones are most likely to appreciate over time. You can buy or sell your bottles whenever you like.

In addition to its strong historic returns, fine wine's low correlation with the stock market makes it an attractive portfolio diversifier.

However, prices are almost exclusively reliant on collector sentiment, which could change at any time. It's also a relatively new asset class, and we've yet to see how it performs during tough economic conditions.

11. Jewelry

Gold, silver, and platinum were mentioned earlier. However, you may already have some of these metals lying in the top drawer of your dresser.

High-quality, designer jewelry is generally made out of rare metals, diamonds, and other precious stones. It's also often sold in limited quantities.

While there's certainly no guarantee your jewelry will increase in value (most do not), collectors are always on the lookout for hard-to-find rings, watches, and other pieces.

Like other collectibles, I wouldn't invest in jewelry unless you are especially curious about and interested in it.

For example, I have a friend who collects high-end watches and is always looking for a few very specific models. What started out as a hobby has turned into an increasingly valuable portfolio of watches.

You should be very familiar with a particular market before considering it as an investment vehicle.

12. Other collectibles

Collectibles are a unique way to diversify your portfolio outside of traditional markets.

I've already covered a handful of collectibles on this list — art, wine, and jewelry — but there are a few other categories you may be interested in as well.

These include sports memorabilia, clothes, toys, movies, cars, and many more.

While I personally wouldn't allocate more than 5–10% of a portfolio to any particular class of collectibles, there are many examples of people making a full-time living trading and investing in a category they know extremely well.

Appreciating assets vs depreciating assets

An appreciating asset is one that is worth more tomorrow than it is today.

On the flip side, a depreciating asset is worth less tomorrow than it is today. A depreciating asset decreases in value over time.

Common examples of depreciating assets include:

• Vehicles
• Electronics
• Furniture
• Appliances
• Clothing
• Machinery
• Tools
• Equipment

Each of these things — while useful and necessary — becomes less valuable over time and with more use.

If you expect to sell something in the future for less than you paid for it, it's a depreciating asset.

Final verdict

As illustrated in the intro, it's difficult to save your way to serious wealth. If that's your goal, you should make it a priority to invest your savings in appreciating assets.

The most common appreciating assets to invest in are real estate and stocks.

These two assets make up the bulk of most investors' portfolios and are also responsible for a significant amount of wealth creation.

If you make these two categories the core of your portfolio, add in some alternatives that interest you, diversify within and across multiple assets, and have patience, you'll be giving yourself the best chance of building significant net worth.