Final answer:
It is true that listing and documenting personal assets is a wise step, especially for insurance and verification purposes. This encompasses tangible assets like a house, land, or collectibles, which can provide nonfinancial and potential financial returns, albeit with moderate to high risk and low liquidity.
Step-by-step explanation:
The statement that it's a good idea to list all of your personal assets, estimate their market value, and film the contents of your house with a video camera to show proof of their existence is indeed true. This is particularly important for insurance purposes and in the event of any loss due to theft, natural disasters, or other unforeseen circumstances.
When we speak about personal assets, we are referring to tangible items such as a house, land, art, rare coins, stamps, and other valuables. Keeping a current and detailed record of these assets can help ensure that you are adequately compensated in the case of any loss.
The bottom line on investing in tangible assets is that while they can provide moderate returns, especially if you enjoy nonfinancial benefits from them (like living in a house or enjoying art pieces), they tend to have low liquidity. This makes it time-consuming and challenging to convert these assets into cash quickly.
Therefore, documenting your possessions, understanding their value, and having evidence of ownership is essential for safeguarding your investments in tangible assets. Lastly, with collectibles such as paintings, fine wine, jewelry, and baseball cards, they not only enhance one's life aesthetically or emotionally but can also potentially increase in value.
Despite these possible financial gains, it is vital to recognize that collectibles often do not yield a higher-than-average rate of return over an extended period and prices can fluctuate significantly, thus posing a risk to the investor.