Final answer:
Collectibles such as artwork, fine wine, and antiques are exceptions to the depreciation rule for long-term assets (LTAs), as they might appreciate over time. Investing in these items entails risk and low liquidity, with no guarantee of high long-term returns.
Step-by-step explanation:
All long-term assets (LTAs) except for collectibles such as paintings, fine wine, jewelry, antiques, or baseball cards are depreciated over time. Collectibles, unlike other assets, may not depreciate because they can provide returns through their inherent aesthetic or collectible value and do not necessarily lose value due to wear and tear or obsolescence. They might even appreciate in value, making them unique among tangible assets.
However, investing in collectibles comes with moderate to high risk, and liquidity is low, since selling items like fine art or antiques can require considerable time and effort. Moreover, while the rate of return on tangible assets like housing can be moderate, the return on collectibles is uncertain and can fluctuate greatly. It's important to note that even though some collectibles might experience periods of significant price increase, the evidence suggests that long-term, above-average returns on these investments should not be expected.