What Is Depreciation And How Does It Impact You?


Are you worried about the issue of depreciation when you make purchases? Here are some of the things that you should consider and the solutions that you may want to keep in mind. 

Depreciation Explained

If you aren’t aware, depreciation is basically the process where all or at least most purchases lose value over time. There is no way to completely stop this process however economic experts will often warn against it. Indeed, many will suggest that you ensure that you never buy a car brand new. The thinking behind this is that after just a couple years the car will have lost half the value. Of course, this isn’t the only purchase that is going to have a significantly high level of depreciation. It is, however, the one that most people are aware of. 

Purchases With The Highest Depreciation

Aside from vehicles, the main purchase that comes with the highest level of depreciation is going to be tech. Why is this? Well, the problem is that tech evolves so quickly that anything you purchase is obsolete in a matter of weeks. For instance, you might love your tech and as such decide to purchase a new computer for thousands. Even before the end of the first year, there will be a brand new model on the market. This new model is going to have a greater level of features and come in at a high price tag, pushing the older model down in value. That’s a problem if you ever want to resell because you will always be making a loss. 

Solving The Issue

There are numerous ways to solve this issue and we have already mentioned one possibility. If you are purchasing a car, then you can consider buying a used vehicle. If you purchase a used vehicle from a source like Hilton Car Supermarket then you will be able to buy a car that has already lost a significant level of value. As such, you won’t have to worry about it losing much more. So, you can cut your losses. You can do the same with tech too, however, there is an issue. You need to make sure that whatever you buy is going to provide the right level of value. 

Should You Just Rent?

Finally, you might want to think about simply renting rather than buying. But this also comes with limitations because you’re restricted with how much power you have over what you are using. You don’t get to build up any assets and that can put you in a weaker position financially. Indeed, many people refer to renting as dead money because you are not getting anything from the process in the long term. 

We hope this helps you understand the issue of depreciation and how it might impact you. As you can see, there are solutions that could prove to be highly beneficial to you. If you take our advice, you can make sure that depreciation isn’t going to negatively impact your finances and take more control over your purchases. 

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Written by themoneyshed

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