A Story about a young woman, a car and a house ...
Inflation Investment Depreciation. This story starts way back in the early 1970's ...
Inflation Investment Opportunities and Depreciation
This story starts way back in the early 1970’s when a young woman, now my wife. Had an opportunity to buy a car or a house, but not both.
The car … a brand new, straight from the show room 1973 Datsun 180B SSS Manual.
The house … located on the hill side looking directly out over Wategos Beach.
They both cost the same and her grand mother lived in Byron. She had grown up in Byron, but now lived and worked in Brisbane.
There was no M1, like there is now. From Brisbane to Byron was a 4 hour trip. Up and down, round and round, through the mountains, over the pot holes and ditches. After the 4 hours if you had arrived in Byron Bay and not broken down, you would have considered your self very lucky.
Mmmm, so … house or car? Young person, she chose the car.
2008 and the Global Financial Collapse arrived and the then owners of the house couldn’t afford to keep the house. So it was sold for … $7,000,000 so yes, they lost $7,000,000 of real money.
Some time later, perhaps 2015 the house had increased in value again, perhaps then approaching $20,000,000.
When I’m not in Byron Bay, I’m a Maths teacher and when were studying financial maths I regularly retell this story to my students to illustrate the difference between an appreciating asset and a depreciating asset.
Oh… and the Datsun … it’s still sitting quietly in the family garage. I just looked it up on Google and a fully restored one is available for $23,000 … still a way to catch up.
It's still about Inflation Investment Depreciation. About 10 years later ...
About 10 years later we met and decided to get married and move to Adelaide.
We had one more car than we needed so the Datsun was parked in the garage of the family house … and it remains there 35 years later.
Oh, and the house. Well it increased in value, perhaps in line with the development of the M1. The reduction in time from Brisbane to Byron Bay from 4 hours to 2 hours or less, and no damage to your car on the way.
And the house reached $7,000,000. Perhaps in about 2010 I went for a walk from town to the Light House, a beautiful walk, but that’s for another time.
I was talking to one of the “Friends of the Light House” and told him the above story. He said there is more to the story … Just before the Global Financial Collapse in 2008 the house had reached and been sold for $14,000,000.
2008 and the Global Financial Collapse arrived ...
2008 and the Global Financial Collapse arrived and the then owners of the house couldn’t afford to keep the house, so it was sold for … $7,000,000 so yes, they lost $7,000,000 of real money.
Some time later, perhaps 2015 the house had increased in value again, perhaps then approaching $20,000,000.
When I’m not in Byron Bay, I’m a Maths teacher and when were studying financial maths I regularly retell this story to my students to illustrate the difference between an appreciating asset and a depreciating asset.
Oh… and the Datsun … it’s still sitting quietly in the family garage. I just looked it up on Google and a fully restored one is available for $23,000 … still a way to catch up.
Inflation Investment Opportunities and Depreciation … who would have thought?
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