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Depreciation is the term given to the decline in an asset’s value, either due to market conditions or other factors like wear and tear. It is the opposite of appreciation.
Depreciation definition
Depreciation is the term given to the decline in an asset’s value, either due to market conditions or other factors like wear and tear. It is the opposite of appreciation.
When currencies and other financial assets devalue, it is often due to market conditions. British pound sterling, for instance, may depreciate significantly because of a perceived weakness in the UK economy. This form of depreciation can be hard to predict with absolute certainty.
Other assets, however, are known to depreciate over time as their usefulness or reliability declines. Machinery bought by a company could be a depreciating asset.
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The value of shares, ETFs and ETCs bought through a share dealing account, a stocks and shares ISA, a SIPP or an IG Smart Portfolio can fall as well as rise, which could mean getting back less than you originally put in. Spread bets and CFDs are leveraged products and can result in losses that exceed deposits. Spread betting and CFD trading are not permitted within the IG SIPP. Please ensure you fully understand the risks and take care to manage your exposure.
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