Investing Principles of the Super Rich - The Power of Depreciation

Опубликовано: 05 Ноябрь 2024
на канале: Jack Chapple

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In this video, i cover an investing principle of the super rich, the power of depreciation. Depreciation is a reduction in the value of an asset with the passage of time, due in particular to wear and tear. It sounds bad, but it can actually be really good.

Every single big real estate investor, big business, factory, office, etc. uses depreciation in a way to help them save money and grow their business in a dramatic fashion.

That’s because in investing, depreciation is a tax write-off that can help significantly reduce your tax bill in order to give you a lot more after-tax cash.

Every industry and country has a different depreciation standard rate. So in Canada, our depreciation (Capital Cost Allowance) is 4% for real estate, and can be up to 50% for other industries. In the united states, the depreciation rate is about 3.6%.

These percentages are important because they are used in combination with your property (or other asset) value, in order to calculate how much of a tax deduction you get.

In this video, I give you an example about how one year of depreciation can save an average investor $9000 in their first year, and potentially 100k+ over the course of the next few decades.

When you scale this up, the investing principle of depreciation becomes a positive feedback loop that gives you more capital…to buy more properties…to get more depreciation…and so on. That is how you become super rich with the power of depreciation.

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