Key Concerns Blog

Sharing our passion of finances and food.

Home - Uncategorized - But It’s An Investment!

But It’s An Investment!

Posted on June 20, 2013 in Uncategorized

I was getting a haircut a few months ago, and my hairdresser and I were discussing different brands of flat irons. We both have very curly hair and choose to straighten it from time to time. I told her that I had bought a nice one since I didn’t want to damage my hair. She said, “Good. It really is an investment.” I chuckled a little, but kept my mouth shut. For her, maybe a flat iron is an investment. After all, she can appeal to more clients if she owns a good one, and purchasing it can allow her to make more money. But for me, all it will do is straighten my hair.

I hear this term “investment” thrown around a lot. I hear it on advertisements for all sorts of products- shoes, clothes, cars, and furniture. I hear it for services: “Protect your investment- have your carpets cleaned by the best!” Now, let me be clear: there is value in purchasing high-quality items. My flat-iron, for example, probably damages my hair less than a cheap one. Your carpet, while not an investment, provides you a clean, comfortable place to live. There is value to that. Keeping your car maintained can lengthen the life of it and save you money in the long run. But saving money is not investment.

The dictionary definition of investment is “The purchase of property with the expectation that its value will increase over time.” We invest in the stock market expecting those stocks to increase in value. We purchase property with an expectation that the property will increase in value. We even invest in ourselves by paying for education with the expectation that we will increase our earning potential. All of these investments are subject to risk of losing value, but with sound investing, we expect they go the other way. My flat iron, on the other hand, has very little value on the open market today. Its only value is its ability to control my hair during high-humidity.