Title: Repair, Replace or Discard? Understanding the Real Value Behind Your Assets

We all have that one favorite item—a watch gifted years ago, a handbag we carry everywhere, or an old kitchen appliance that has served us loyally. When these items start to wear out or malfunction, we’re faced with a decision: Should we repair it or replace/discard it?

This decision, surprisingly, isn't always made on sound financial logic. More often, it’s driven by emotion and habit. And that’s where we go wrong.

Let me give you two real-life examples from my own experience.

My wife recently spent ₹1,000 to repair a wristwatch whose purchase price was around ₹700. In another instance, she was willing to spend ₹300 on fixing a handbag that originally costed her ₹300—and has already seen years of use. Her reasoning? “I like it.”

I couldn’t help but reflect on how such decisions ignore some basic—but crucial—principles of asset valuation.

Rational repair/ replacement /discard decision is much more crucial in business environments, where the financial stakes are much higher. 

Many Industrialists reluctant to let go their aged old non-functional equipment insure these separately as obsolete assets in their property insurance policies. 

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Emotional Attachments vs Economic Value

We tend to form emotional bonds with our possessions. That’s human. But when it comes to spending money, especially on repairs, emotion can cloud rational judgment.

The economic value of an asset is not the same as its original purchase price. As time passes, most items depreciate—they lose value due to wear and tear, obsolescence, or simply changes in taste and utility.

The Three Pillars of Repair Decisions

When considering whether to repair an asset, we should ideally evaluate:

1. Current Market Value (CMV)
   What is the item worth today, if you tried to sell it?
2. Residual Value (RV)
   What is the item expected to be worth at the end of its useful life?
3. Remaining Useful Life (RUL)
   How much longer can the asset realistically serve its intended purpose after repair?

Now apply this to any repair decision:
If the cost of repair exceeds the CMV, and the RUL is short, the repair is likely not justified—financially speaking.

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A Simple Rule of Thumb

A good benchmark to use:

Repair cost should not exceed 50% of the item’s current market value, unless the item has a long remaining useful life or exceptional utility.

Of course, there are exceptions. Heirlooms, sentimental gifts, or rare collectibles may warrant a different approach. But for everyday items, this logic helps prevent throwing good money after bad.

How to Think Like a Valuer

Before making your next repair decision, pause and ask:

• How old is the item?
• What is its resale value today?
• How long can it continue working effectively?
• Is the cost of repair proportionate to its value and future service potential?

This mindset shift can lead to smarter financial decisions and better resource allocation—not to mention less clutter and fewer regrets.

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Conclusion

Valuation is not just for accountants, insurers, or investors. It’s a life skill. Whether it’s a ₹700 watch or a ₹30 lakh machine, we must learn to separate emotional worth from economic value.

Let’s be rational where it matters—and reserve our sentiment for things that truly deserve it.

The above interpretation is absolutely personal in nature and is not binding on any individual or organization in particular.