Depreciating Assets

Time alone can destroy some forms of wealth.

2025-03-31

This is not financial advice or a sales pitch for lifestyle or financial planning resources. I have nothing to sell. Everyone’s financial path and circumstances are different. Not owning depreciating assets is an essential part of my path to a nomadic life style.

Many factors affect accumulation and maintenance wealth. Time is one of them. Time alone can destroy some forms of wealth. For the sake of this discussion, I define these as depreciating assets.

Real estate is a depreciating asset because, like many asset classes, expenditures are needed to protect value. Monies required to protect real estate values are called carrying costs. Carrying costs are high compared to maintenance fees of other asset classes. Carrying costs include physical maintenance, repairs, taxes, assessments, insurance, HOA memberships and broker fees. Money spent on carrying costs could be invested in non-depreciating assets. Real estate always depreciates net wealth.

Real estate depreciation can be offset and sometimes exceeded by recouped housing costs, rental income and/or inflation. Recouped housing costs are a non-starter for me because nomads, by definition, do not live in one place. Rental income may make sense for nomads that have rental management skills they can administer at a distance. I have no such skills. Inflation only makes sense to me for speculation on raw land. Raw land has lower carrying costs than developed land but raw land owners still have to deal with issues like encroachment. I have no experience or expertise in land speculation. The deal killer, for me, for all forms of real estate is its illiquidity.

There is no need to explore the down sides of even worse depreciating assets like automobiles, boats and such. I am fortunate to have divested myself from the hassles, wealth loss and illiquidity of depreciating assets. Doing so allows me greater freedom to travel anywhere in the world. In other posts, I examine: