No matter what type of investor or consumer you are, you likely have at least some of your capital tied up in physical assets. While the term “assets” can apply to intangible items like stocks and accounts receivable, tangible assets like vehicles, buildings, and machinery can also provide long-term value, both in service for some useful function (like driving a car to work) and in terms of resale value when you no longer need the asset.
The problem with physical assets is that they tend to degrade over time. Assets with moving parts suffer wear and tear, which ultimately compromises both the function and value of the item. Other assets may become less valuable as their structure becomes obsolete, or as they become worn through regular use.
Accordingly, physical assets aren’t going to yield you the highest return for your investment. At the same time, many are practical necessities that can yield value in ways beyond resale, so it’s worth purchasing them. Thankfully, there’s a way for you to protect the long-term functionality and resale value of your physical assets: predictive maintenance.
Preventative vs. Predictive Maintenance
You might have heard the terms preventative maintenance and predictive maintenance used interchangeably, but the reality is, they represent distinct concepts. Both are an improvement over the “fix it when it breaks” model of maintenance, which relies on purely reactive decision making.
Preventative maintenance is a process of repairing, replacing, or improving various components of your machinery or home according to some combination of manufacturer recommendations, general best practices, and personal experience. It generally occurs on a regular basis; for example, you might change the oil in your car every X number of miles, or invest in a new water heater every ten years. This is a good way to prevent problems from occurring (hence the name), since it forces you to make changes and updates long before any sign of failure.
There’s a weakness to preventative maintenance, however; it encourages you to buy new components and invest in repairs far before they become necessary. Over time, you’ll experience fewer failures, but you’ll be investing far more time and money in your assets in the long run.
Predictive maintenance attempts to compensate for this weakness; rather than swapping out components or making repairs at specific time intervals, it allows an owner to use their own senses to determine when the best time to make repairs is. You can forgo manufacturer recommendations, for example, if you feel your components are showing minimal signs of wear. The advantage here is that you’ll invest money and time in your assets only as necessary, minimizing your total investment in an asset while still maximizing its lifespan.
Overcoming the Disadvantages of Predictive Maintenance
Of course, there are a couple of disadvantages to predictive maintenance; it relies on an owner having significant knowledge and/or experience with the given asset, and it requires near-constant attention to the asset’s condition if you want to catch problems before they spiral out of control.
To make up for these disadvantages:
- Learn whatever you can, or find a trusted expert. Learn as much as you can about your chosen subject, such as mastering the art of maintaining your own vehicle. It will take many hours and lots of experience to gain mastery here, but think of it as a one-time investment that will pay dividends throughout your life. Of course, if you don’t want to learn the skills or do the work yourself, you can also work with a trusted expert to ensure you’re only paying for the maintenance that’s truly necessary.
- Conduct predictive screenings regularly. You don’t need to keep to a strict schedule like you do with preventative maintenance, but you should conduct predictive screenings on a near-constant basis. Keep an eye on each individual component, and pay attention to any signs of wear or inefficiency. You’ll have a tight time interval to work with if and when you notice a problem, so it pays to catch those problems early.
Ultimately, any kind of preventative or predictive maintenance you use to keep your assets in good condition will help you maximize the ROI of your equipment and items. When it comes down to pure ROI, predictive maintenance tends to have the upper hand, but if you want more convenience, preventative maintenance might be better for you. Either way, keeping your assets in shape will ensure they remain functional longer, and net you a higher return when you ultimately sell them.