It can be fun to buy shiny new items. Unfortunately, many of the products we purchase quickly lose a significant chunk of their value. You may be aware that driving a car off a lot after purchase is an immediate value sinker but do you realize how far that value can drop?
From items our kids love to sentimental purchases and even some things you might think will sell for a higher value later, these purchases almost always lose their value the second you buy them.
Jewelry Can Depreciate More Than You Might Think
The team at Jewelry Notes have estimated that a $5,000 diamond ring is likely to fetch between $1,500 and $2,500 when sold second-hand. On average, 50% of jewelry's value is lost the moment it has been removed from the store, even when that jewelry is still in perfect condition.
There's a reason pawnshops pop up all over the place. Owners of these establishments are able to buy used jewelry, among other items, and offer them at a steal.
Timeshares Are Not Worth The Sales Pitch
Timeshares are almost never a good investment. A $20,000 timeshare can go for as little as $4,000 on the resale market. Additionally, you typically need to find the buyer yourself and sometimes pay transfer fees if they take over your contract.
Redweek estimates that the average timeshare loses 30% to 50% of its value the moment a contract is signed. On top of the immediate depreciation, you lose even more money if you can't use your timeshare for unforeseen reasons.
New Vehicles Depreciate Immediately And Then It Gets Worse
Automobiles depreciate the second you drive them off the lot. In fact, that depreciation averages 11%. The numbers look even worse when you look at the overall life of that new car, truck, or SUV you just purchased.
After five years, the average depreciation on a vehicle is 66%. That means a $20,000 car is worth just $6,400 after five years. If you drive a lot, that value can decrease further. Any scratches or other issues? You guessed it, the value will decrease even further. Consumer Reports notes that the average lifespan of a vehicle is just eight years.
Wedding Gowns Are Sentimental And Retailers Know It
Dressmakers are well aware that buying a wedding gown is sentimental and for that reason, they set prices well above the actual value of the dresses they produce.
The team at PreOwned Wedding Dresses created a value calculator and found that the average $5,000 dress was worth less than 50% of its original value within one year of purchase. That's a pretty steep drop in value for something you'll (hopefully) only wear once in your life.
Toy Collections Typically Don't Work Out
If you think that really hard-to-acquire toy is going to increase in value, you're probably wrong unless you manage to sell it right away. In fact, most toys will lose almost all of their value the moment you bring them home.
These days, fad items are quickly mass-produced. While they may seem like collector's items when first purchased, mass-produced copies will quickly reduce their value. Just take a look at the Beanie Babies craze that produced sky-high values which rapidly decreased in value almost immediately.
Owning A Home Isn't Always A Moneymaker
Owning a home is part of the American dream for many people. However, that doesn't mean a home purchase is necessarily a good value. The IRS actually allows a new home purchase for business or rental purposes to continuously depreciate over a 27.5-year period.
Selling your home can also be difficult if there is a market downturn or your area is no longer considered desirable. Just take a look at the larger homes that baby boomers are having a hard time selling as younger generations look to buy smaller, more affordable homes.
Brand New Video Games
We get it, you're a gamer and you want to own the newest Call of Duty the moment it drops. That's great if your main recreational activity is gaming, otherwise, you're better off waiting for a used copy to reach your local Gamestop.
Video games typically sell on the second-hand market for around 40% of their initial value. Of course, when it comes to the entertainment value you receive for many hours of play, that's not a bad return if you simply can't wait to buy the game used.
Electronics Become Obsolete Quickly
Electronics are great for providing entertainment but that doesn't translate to a high resale price. This shouldn't really be a surprise given the short lifespan for many pieces of electronics we use on a daily basis.
Aside from the short lifespan, tech improvements often quickly push down the price of the items we purchase. Just think about $5,000 flat-screen TVs that were being sold 10 years ago. Today, you can buy a better quality 43" flat screen 4K TVs for less than $400.
New Smartphones Depreciate Faster Than Most Items
We decided to cover smartphones as their own category of electronics because the depreciation on the newest must-have phone is incredibly high. In just one month, an iPhone can lose 34% of its value.
The team at Decluttr examined various brands and found that many lose up to 78% of their initial value in just one year. Using a protective case and a screen protector can lead to a higher resale value but you'll never recapture anywhere near your initial purchase price, even if the phone is only a month or two old.
Books Are A Better Value When Purchased Used
Unless you've luckily stumbled upon a rare copy of a book, you're not going to receive a lot of money for your used item. We did a quick search for hardcover books from the Harry Potter series and were able to find copies selling for under $3. That's a depreciation value of 50-95% depending on when they were purchased.
With free copies available at libraries and plenty of used book stores that sell copies for well below new market value, we don't see the purpose in paying full price for a new copy of nearly any book.
Brand New Boats
A boat will typically depreciate for seven to ten years, depending on the quality of the rig you've purchased. Twenty percent of that depreciation is typically experienced in the first year. Ultimately, the low end of a sale will fetch about $100 per foot in boats that have been around for around a decade.
That means a 10-year-old speedboat might sell for $1,800. If your purchase is in pristine condition you might get more but it's not going to sell anywhere near its original value. Just like cars, boats also drop in value the moment they are taken off the dealer's lot.
Media Items Lose Most Of Their Value
We talked about electronics and video games but what about other types of media? Whether it's a Blu Ray disc, DVD, CD, or other similar items, the value is not going to stick around.
Sure, you might have that hard to find Beatles vinyl that earns you some big cash but more times than not you can expect a decrease of about 75% to 90% in value. Just walk into your local pawn shop and you'll find that a ton of movies in all formats sell for under $5 each.
Furniture Should Be Kept Until It's Time To Replace
Furniture might be a necessity in our homes but that doesn't mean it's a good investment. If you plan it to purchase a really nice high-quality couch and then flip it a year later, you might want to think twice.
On average, the furniture you buy today will lose about half of its value by tomorrow. Some furniture, such as couches and mattresses, will lose value faster than kitchen tables and other items that tend to show less wear over time.
New Clothing Is Fun But The Return On Investment Is Low
The second you take a pair of jeans or a new shirt home, the value of those items depreciates incredibly quickly. In fact, you'll be lucky if you can get 50% for that shirt you absolutely had to have.
On average, a second-hand buyer is likely to give you just 35% for your used items. You might fare a little better if you sell the items yourself but 50% is still going to be a huge win. You'll get even less money if your clothing isn't still in pristine condition.
Handbags Are Generally Not A Good Investment
You might think that Louis Vuitton or Prada bag you paid a lot of money for is going to retain its value; unfortunately, that often isn't the case. There are some exceptions to this rule, of course. For example, you might purchase a handbag that has more limited supplies than typical handbags.
With that being said, you'll be lucky if your handbag returns even 50% of the original investment. If it's not a high-end handbag you'll be lucky to receive an offer of 25% from the original purchase price.
Consumables Such As Fancy Hand Creams
If you purchase a fancy hand cream or a bottle of expensive perfume, you'd better consider using the entire product. These items quickly depreciate in value and often won't sell on the second-hand market.
Given that many of these items have expiration or "best if used by dates," it makes sense that they quickly lose their value and then drop quickly once those dates near. Plus, who really wants to buy your half-used tub of expensive lotion?
It's not just wedding gowns that lose their value quickly. That tuxedo you decided to buy instead of rent? It will lose 20% of its value on an annual basis. This same formula can generally be applied to other pieces of formal wear.
If you know you're only going to wear a tuxedo or even a suit very seldomly, it may be worth your time and money to visit a rental store. As an added bonus, you'll get to wear up-to-date outfits for your seldom social functions that require formal outfits.
Home Improvements Such As Pool Installation
Adding an in-ground pool will only add about 5 to 8% value to the overall price of your house. It can easily cost upwards of $25,000 to $30,000 for a basic in-ground pool installation.
That means if you own a $300,000 home you can expect to get back around $20,000 for your $25,000 to $30,000 investment. Other upgrades such as luxury bathrooms could also end up acting like a money pit. We know home flippers make it look easy on home renovation shows but much of that work is often exaggerated for TV purposes.
Food Is Not Great For Resale Value
You're probably wondering who in the world would try to sell food they have in their home, and you might be surprised. In many cases, extreme coupon users and anyone hard up for cash may try to sell food to earn some extra money.
Because of expiration dates and the availability of free food from food banks, there isn't a big market for food items. You will be lucky to get 20% of your original money back on these items.
Skis, snowboards, weight lifting equipment, and various other pieces of sporting equipment are known to lose their value the moment they are used. Overall, though, this category depreciates much more slowly than many of the others on our list.
Your best bet with sporting equipment is to invest in hunting and camping gear. These items, when properly cared for, have the least amount of depreciation since they get a lot of use and have value as sustainable living items.