Define investment. Dictionary.com defines it as “the investing of money or capital in order to gain profitable returns, as interest, income, or appreciation in value.” Now answer this question: how many times have you heard or read, “Buying this is definitely an investment.”? I have heard it many many times. What does that statement really mean? I’ve been studying financial management for 4 months now, and we’ve talked about investments: how much will be your expected return in n years, how to decide where you’re going to invest your money, and calculating the risk of your return.
How are these related with us consumers? Simple. Every year, we spend a lot of money with clothing and/or accessories that we say are “investments”: designer bags, an expensive LBD (Little Black Dress), cashmere sweaters, or wool coats. People say and believe, “this will be an investment.” Let’s face it, buying that Chanel bag or a Christian Louboutin shoe is not really an investment — literally — because it does not give you anything in return — well, maybe a few envious look from your fellow fashionistas, but that’s about it. We all know once you buy an item (e.g. car, laptop, or a dress) its value depreciates over time with the exception of stocks and bonds. Where did you see a merchandise increase its value after the owner used it?
In my opinion, using a keyword like “investment” is a marketing ploy to attract customers to buy their merchandise. I also think that the word “investment” could translate to the “cost-per-wear” attitude of the consumers. We, sometimes, calculate if one thing is worth it based on how many times we are going to use it. The cost-per-wear calculation only means that that huge purchase will be worth it in the end, but that does not guarantee a return on the money you spent initially; it only gives you an inside relief that you accumulated the cost of an item by using it everyday.
I am not, in any means, targeting any of the marketing or advertising people out there. I think in today’s economy we, as consumers, should be more intelligent in choosing where and how we invest our money. We all know how hard it is to earn them, I suggest you splurge a little bit, but make sure every penny of it will be worth it.