Sunél’s Blog | What is it worth to you?

Sunél Veldtman, | 30 August 2019

As an adviser, I am frequently asked about the investment merits of lifestyle assets such as holiday homes, art, yachts or vintage cars. In South Africa, holiday homes are popular and a signal for some, of status and wealth.

I married into a family with a holiday cottage at the coast and have been going there for thirty years. That cottage contains special memories of firsts and lasts, Christmases with long tables, mix-and-match chairs and mismatched people. It is a symbol of my in-law’s generosity.   They began a culture where there was always room for more at the table – more people, more food and more laughter. It was always joyous and informal and over the years we have spent many happy weeks there.

What is the house worth to us?

This is the issue with sentimental assets. The theoretical worth of an investment asset is the present value of the future income or potential income and the final value at disposal.

We could turn it into a rental property, but it is the home of our treasured memories, a sacred space just for us. Which means it doesn’t generate income. In fact, it costs us. It is entirely our choice, but it makes our lives easier and it means that it feels like home. It is where we gather our dispersed lives together, as an extended family.

Will we sell it even if we’re offered a ridiculous price? And what will it take to let our family part with that cottage?

The same is true of other lifestyle assets. Typically, if you are attached to it, it is not an investment asset.

It buys memories. Not future returns.

Kind regards,