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Are you an Appreciating or a Depreciating Asset?

Are you an Appreciating or a Depreciating Asset?

This article will challenge you to look at yourself as an asset and categorize yourself as either an appreciating or depreciating asset.

For those who don’t know what the terms in the heading mean, let me make the basics clear. An appreciating asset is an item whose value goes up with time, for example, real estate, bonds.

An item that costs less with time is called a depreciating asset, for example, your motorbike, your wedding suit, the dining table, a laptop.

The stocks in your trading account are an appreciating asset whereas the car in your garage is a depreciating asset. But, have you have paused to wonder if you as a person are an appreciating or a depreciating asset?

“Buy appreciating assets and reduce the money you spend on depreciating assets”, is well known and sound financial advice. I’m sure you can classify any item into one of these two categories. But did you know that you’re an asset yourself? Most people fail to look at their own skills and abilities as an asset.

appreciating vs depreciating asset

So, the question is, are you an appreciating or a depreciating asset? Even though you don’t look at yourself like you typically look at your car or your house, you’re worth some value.

Take a moment to ask yourself, “A year later, will your skills be worth more than what they’re today or less?”

Don’t blindly answer saying, “I’ll receive a hike at the end of the year, so I’ll definitely be worth more.” Companies offer hikes not only for your performance but also to keep up with the increase in prices of all goods, aka inflation.

If you take money out of the equation, a more important question to ask yourself is “Are my abilities growing with time, stagnating, or even worse, on the decline?”

This article will prompt you to look at yourself as an asset and throw some light on where you stand currently.

Is your skill improving, worsening, or stagnant?

Do you know if you’re skills are improving, stagnating, or worsening? The sections below will help you make a self assessment.

Step 1: Recognize your core skill

Take your core skill, the one that brings you bread, peanut butter, and jam. For example, management, sales, programming, digital marketing, quality assurance, or any other skill which forms the crux of your profession. Most people have one core skill, but some have multiple. If you have many skills, pick the strongest one.

Related article: How to identify your long term goals

Step 2: Identify the current state of your skill

In the next 3 years, what do you think will happen to that core skill of yours? Will it improve, weaken, or remain as is?

If you answer this question without enough thought, you’ll inevitably blurt out, “my skill will improve.” I’d recommend you to think deeper. Are you sure your skill will improve? If yes, by how much? Even if you cannot quantify it with a number, try to define it with terms like:

  • a little improvement
  • average improvement
  • significant improvement
  • astronomical improvement

Though these terms are subjective, they’re better than not having any self-awareness of your skills.

I’ll provide some examples to help you think harder and with more honesty.

1. Upward growing skills

Ambrose took up the role of a leader for a 45 member digital marketing team two years ago. Until then, he had no experience leading and managing people. At first, he struggled to keep people motivated, handle the tasks and get the job done. But, in the last two years, he has spent 5 hours a week, sharpening his leadership skills. He read books, spoke to his experienced superiors, attended seminars, took up certifications, and experimented with different methods.

Today, Ambrose is a far better leader than he has when he started. He admits that he still has a long way to go and therefore, he continues to spend time and money on honing his leadership skills further.

Ambrose is an appreciating asset because his skills are improving every year. 3 years later, he would have turned into a more seasoned leader than he is today.

Related article: How to improve your skills 1% at a time using Marginal Gains

2. Stagnant skills

Timothy works as a sales executive for a baby product. He has over 10 years of experience in the domain. For the last 3 years, Timothy has applied the same tactics he has learned over his career. He neither tries new ideas to improve his customer conversions nor spends time learning the innovative sales techniques used in the market.

Despite his experience, Timothy’s skills have stagnated over the last 3 years. Though the job teaches him a trick or two every now and then, overall, his sales ability hasn’t changed for a long time now.

3. Depreciating asset

Quinn is a sportsperson who has undergone swimming training for over a decade. He has participated in various national events and earned top honors. He wants to represent his country at international events.

Currently, Quinn is 29 years old. Though he has trained for 15 years, his peak performance years are behind him(swimmers peak young). As years pass by, even if he puts in relentless hours of practice, Quinn’s body won’t function as effectively as it used to.

Quinn is a depreciating asset at swimming.

Please note: Choosing a depreciating career skill isn’t a mistake. It only implies that you have a shorter period to succeed and make a living out of it.

The natural cycle of appreciation and depreciation of professional life:

Different careers follow a different growth trajectory. Professions that rely on physical prowess usually have a younger peak performance age whereas skills that require mental ability and experience, take far longer.

Appreciating skills:

appreciating skills graph

These are skills that require years or even decades to master. The higher your experience and expertise, the more you’re valued and sought out.

Take, for example, successful businessmen you know. The wise and respected members are either middle-aged or beyond. People like Jeff Bezos and Warren Buffet have amassed experience and their value keeps increasing even as they grow old. Though Buffet is in his 90s, his investment advice and wisdom are revered even today.

That said, you’ll find exceptions where a young person delivers value that only seasoned experts can. But, those are outliers and not the norm. An appreciating skill at some point of age starts tapering downwards.

Examples: Leadership, technology, sales, and marketing

Appreciation depends less on the skill, and more on the person’s mindset. Two people with the same core skill can take opposite approaches. One can choose to hone his skills year after year while the other can stagnate over time.

Related article: Do you have a growth or a fixed mindset?

Depreciating skills:

depreciating skills graph

These are professions that have a limited time window where a person can perform at his/her peak. Sports, beauty, and other business models which depend on physical attributes usually have a limited shelf life.

Take, for example, Bethany, who’s pursuing a career in modeling. She has the highest potential in the industry in her early and mid-20s. If she achieves early success, she can carry it further into her 30s. But beyond a certain age, her opportunities reduce.

Intelligent people in such professions recognize their limited time window and act accordingly. Pragmatic models and sportspersons go on to start their own businesses or invest their income smartly.

But when wealth and fame come at a young age within a short span, people have trouble handling their success. There are countless examples of young celebrities making millions and going bankrupt in a few years because of their extravagant purchases and reckless spending.

If your core skills is an asset that depreciates before you’re 40, you should:

  • Make the most of it as early as possible
  • Safeguard your returns instead of blowing them all
  • Find an alternative way to keep yourself engaged after your primary skill grows weak

Stagnating skills:

stagnating skills graph

Among the three types, stagnation is the most dangerous. It beats depreciating skills because a person who is stagnating unaware of the consequences and the risk, whereas a person with depreciating skills is well aware of the limited window of opportunity. Also, depreciating skills are due to external factors such as physical limits, beauty, age where stagnation is due to internal factors such as comfort zone, and loss of motivation.

A typical example involves a student who is embarking on his professional career and taking a job for the first time. The logic applies to any person taking up a new job at any point in their career too.

Related article: How to be successful at work

The person starts at a specific expertise level that he has developed due to various reasons such as:

  • college education
  • good grades
  • IQ
  • self-learning
  • past experience

For the first few months, or years, the person shows immense enthusiasm where he operates as an appreciating asset. His skills grow more valuable until a point where his motivation starts waning. I have noticed that people have a strong tendency to lose interest around 2-3 years of experience.

From that point, the person goes about his day-to-day activities by putting in only the minimal effort necessary. Nothing more. He shows no interest in improving his skills or delivering high-quality output. He only does enough to remain at the job.

At first, his skills stagnate. A year or two later, he turns into a depreciating asset because his experience loses meaning. A lesser experienced employee delivers the same output and organizations can find such resources at a lower expense. Over time, the person develops insecurity of his job, frets over the chances of getting fired, or broods over the possibility of a pay cut. The EMIs and family responsibilities make the worries more troublesome.

Stagnation can demotivate you, weaken you and finally destroy you.

Differences between appreciators and depreciators/stagnators

Only a few professions make you a depreciating asset by default. For most other professions, people stagnate and depreciate entirely because it’s their own fault. Once a person grows complacent and slips into a comfort zone, mediocrity looms large.

Therefore, the difference between appreciators and depreciators/stagnators lies more in the mindset and approach than the skill itself.

The list below highlights how appreciators differ from depreciators/stagnators in their qualities, attributes, and reactions:

Appreciators:

  • Curious knowledge seekers who are eager to learn and improve themselves
  • Learn from courses, books, seminars(not only for work experience)
  • Takes the time and spends effort to become an expert in the core area
  • Open to constructive criticism and negative feedback. Processes them with an open mind and spots areas of improvement.
  • Complain less and solve the problem(hold themselves accountable for a failure and challenge themselves to get out of a difficult situation)

Depreciators/stagnators:

Happy with what they have and do the minimal possible to stay afloat

Limit their learning only to what the job teaches from experience

Assumes what they know is sufficient

Offended by any form of criticism and negative feedback. Defends their current state and argues to prove their point.

  • Whine about a problem and hardly attempt to solve it(blame others for failure and expect others to get them out of a difficult situation)

How to become an appreciating asset?

If you’re a depreciating or stagnating asset, your future is at stake. The sooner you accept the reality, the easier it is for you to make amends.

Here are a few steps to make sure your value is continuously appreciating

Step 1: Identify where you stand currently

To begin, be honest about your current skills.

Do you know what’s more dangerous than being a stagnating/depreciating asset? Denying that you’re one.

If your skills haven’t improved in the last year, it’s time to take a hard look at the mirror and be honest to yourself. If you’ve stagnated for a couple of years already, it’s time to act. If your skills haven’t budged in the last 5 years, the time is now or never.

Step 2: Identify your goal

How much do you want to develop your core skill? Because goals are subjective and personal, each person will have a different target.

Do you intend to be the best performer in your team? Do you intend to be among the top performers of your entire organization? Do you intend to be perceived as an expert in the whole market?

The effort you need to put in is proportionate to the destination you want to reach. The bigger your goal, the harder you’ll have to strive. There are no shortcuts.

Related article: Are You Chasing Fancy Goals Instead Of Your Real Goals?

Step 3: Spend time learning deliberately

As you advance in your career, you tend to feel the urge to take things lightly. If you give in, comfort zone becomes your daily hangout spot and mediocrity becomes your sidekick.

If your skills have to increase in value over time, you have to find ways for deliberate learning. What you learn at the job will offer lessons, but most other people are also taking the same path. If you want to be among the top talent in your field, you will have to dedicate time explicitly to learn

One technique that helps is the 5-hour rule. That’s just a simple methodology advocated by the likes of Warren Buffet, Elon Musk, and Bill Gates where you must spend 5 hours a week learning. That’s outside what you learn while performing your job.

You can read books, take up courses, attend seminars, complete certifications or use any other sources which sharpen your core skill.

If 1 hour a day is too hard to begin with, start with 15 or 30 minutes a day. The duration you spend on learning is less important if you follow the routine consistently.

Step 4: Assess yourself every 3 months

Once every quarter, sit down to evaluate yourself. Assume you’re your own manager performing your review. Appreciate what you did well and criticize your poor performance, and acknowledge what you could’ve done better.

The purpose of this assessment is to grow more self-aware of your progress. The more honest you are, the faster you’ll grow.

Related article: How to perform an honest self review

Pointers for effectively improving your skills:

Seek new sources of knowledge:

You’ll find a plethora of options today to learn and improve your skills. Udemy, Coursera, LinkedIn Learning are platforms where you can take up courses. Several other EdTech websites offer free courses too. Amazon has an endless list of books on any topic. Many experts conduct masterclasses and seminars.

If you’re keen to improve your skills, you’re living in a time where information exchange is at its peak.

Spend and learn:

Way too many people are stingy about spending money on learning. But, the same people splurge on a large pepperoni pizza, a pina colada, or a designer handbag. These materialistic things last temporarily, but knowledge lasts forever. Besides, what you spend on learning will return its value in money multiple folds over time.

Don’t be a miser. Spend and learn.

Be humble:

If you believe you possess skills that are better than those around you, your arrogance can lead to your downfall. No matter how good your skills are, cultivate humility because improvement is a lifelong journey. Even if you’re the best in the world, you can still improve yourself.

Don’t be afraid to compare:

I’ve always advocated to compare you with yourself and not with others. This is one area where I make an exception. Don’t be afraid to compare yourself with other experts in your area. But, don’t look at them with envy. Rather, identify the gap between their skills and yours, and find ways to bridge that gap.

That said, watch out for unrealistic comparisons. If you’ve taken a career in investing just a year ago, don’t compare yourself with Warren Buffet. Sure, you can learn his techniques and decision-making tactics, but don’t make an insane aim of achieving similar success within the next couple of years. Rather make a more realistic comparison with people who are slightly better than you.

Related article: What happens when you compare yourself with others

Busy schedules are not an excuse:

“I don’t have time for this” is a classic excuse to postpone deliberate learning. If you cannot make time for improving yourself, you’re letting your comfort zone take over.

Routine tasks and responsibilities will crave your attention every day. But these are jobs that help others achieve their goals. When will you work towards your own? Only you can make the time to improve yourself. So, be selfish and put yourself first.

Conclusion

Far too many people stagnate because they fail to put in the effort to sharpen their skills. Early in their career, people show brimming enthusiasm which slowly fades into oblivion within the next 5-10 years. If you’re one such person who has slipped into a comfort zone, take this as a wake-up call.

Ask yourself if you’re an appreciating or a depreciating asset. Are you becoming more valuable over the years like a barrel of wine, or losing your value like an old automobile?

If you’re honest from your heart and humble from your mind, you still have ample time to pull yourself back and increase your value. The question is, will you?



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