Investing vs Buying household items

How you choose a product / security to invest in is actually not very different from how you would buy a household item. Just that the cost of it is magnified and it may be intangible.


It's in common sense that we want our new household item to

1) Serve its intended purpose well


You want to be able to use the item to your intended purpose so that you can do work much more efficiently with it. Otherwise, consider to get something else instead.


Similarly, you want your investment to work for you and give you the expected ROI (returns on investment) eg. through dividends, capital appreciation.


2) Be value for money


You don't want to overpay for your item. Naturally for that purpose you will wait until it goes on a sale or you would compare prices for the lowest between various shops (if there's no price standard set). 

Also, if two different items can serve the same purpose equally well or requiring the same effort for use, then naturally you will opt for the cheaper one.

Cheap = good 
       or no good?

Cheap and expensive are relative.


Similarly, you want to invest at the dips and not at the peaks (ATH). Buy into the value the product presents.


3) Be durable and safe


You want your household item to last as long as it could, so its quality (aka how well it can survive the abuses of various circumstances) and safety for use might be key considerations when making the purchase. You want to minimize risk.


Similarly you want your investment to be 'durable', such that ten or twenty years down the road the company (coin, token or whatever product) that you have invested in are still doing well (and perhaps grew too).
Stability and growth could also be a substitute for durability here in a sense.

--

What? You bought but don't know how your new household item is supposed to work for you? 

You bought because everybody else in the supermarket is buying it?


Hmm...


Strange that when it comes to investing, common sense somehow... became not very common.


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Comments

  1. Can household items bring out the greed and fear in us?

    ReplyDelete
    Replies
    1. Hi Uncle8888,

      Oh yes, the emotional roller coaster is also what makes investing so fun and common-senseless.

      Delete

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