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Originally Posted by jeffrey
When people begin talking about investments, the conversation usually heads in the direction of stocks, bonds and other financial instruments of that sort. What most people don't realize is that's not where the average person can get the best return on their money. Although most people don't think of it this way, the truth is that purchasing items which are on sale that you regularly use is probably the best investment you can make with your hard-earned money.
Let's take an example of cosmetics. It is more than likely that you purchase a new supply when you are about to run out of your favorite brand. Since you are almost out, you will likely purchase them at their regular retail price.
Now if you happen to see these cosmetics for sale at 50% off their regular price, but you have a 6 month supply at home, is it worth buying them? Since there are items that you use and know you will use in the future, even if it takes you an entire year to use all the cosmetics, you have made yourself a 50% annual return on your investment that was both tax and risk free. That is something that any reputable investment advisor would never guarantee.
On the other hand, if you had purchased some clothes that were a great deal because they were 50% off, but which you would have never purchased at their regular price and which you really didn't need, then you have not saved any money. The clothes would be an extra purchase. Even though you saved money on what they would have regularly cost, they are also something that you would not normally buy. The key to getting the return on your money when you purchase items on sale is that it should be something you would buy eventually whether it is on sale or not.
Another issue to remember is that if you spend the savings you gained from getting the items on sale for something else, you also haven't saved a dime. When you are able to get deals on items that you regularly use and have budgeted for, then that should free up the extra money you saved on the purchase to be invested into your savings. If you decide to reward yourself after getting a $50 return on a purchase over what you would have normally paid by buying yourself a new $50 sweater, then the savings were never realized.
Finding the savings isn't all that difficult. If you're organized and put in a little effort, you should be able to buy most items at a 20% or more discount from their regular retail price. Any item that you regularly use and can find at a 30% or more discount you should consider buying in bulk.
Most people never consider getting a return on their money by shopping for the best deal. If you do, however, you will be making a return on your money that most investment strategist only dream of. Simply purchase items when you see them on sale which you would eventually buy anyway and place the difference into your savings. Not only is your return instantaneous, there isn't a better risk and tax free investment you can make on your money.
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The point should be a person should have a cosmetics budget for the year, and make the best decisions possible to spend that budget wisely.
I hate to be a pessimist... but comparing saving money when something is 50% off, and I was required to spend money to get the 50% savings to setting aside a fixed sum which would return a positive amount is incomperable.
After 1 year when I bought any "consumed" consumer product I have "nothing" to show for it... so in reality I don't have "savings". Maybe more pores on my face or a trophy wife after my good looks, but no true savings.
After 1 year if I set aside money, I have "savings".
The point should be a person should have a cosmetics budget for the year, and make the best decisions possible to spend that budget wisely.