Consuming & Investing, Which Is Which?

How many times have you ever seen a movie that you didn't want to see at all? When i go out with a girl, i would watch whatever she wanted to and be glad to do so. Is going to cinema consumption? Yes, generally speaking, it is. No, it isn't, in that particular case. It becomes an investment. Don't you agree?

Everyone seems to think they can distinguish between consumption and investment. One can make clear that buying a car, going to the theater, karaoke and shopping are consumptions, while buying stocks, bonds and houses are investments.

Consuming is to buy what you want. Investing is to buy what you don't want.

That's why people find shopping exciting and investing boring. But why do people buy something that they do not want? The reason is that something will make money in the future (or at least, make you happy in the future, in the movie case).

Aunts used to say they bought gold jewelries for investing, hoping to resell them at higher prices. That makes little sense. They were seldom able to sell them at higher prices. The reselling hopes only lie on art works, limited version of jewelries, watches and other collectibles.

But investment is not confined to the meaning of "buy low, sell high". An investment is a foregoing of present purchasing power to future goals. Manufacturers invest in machineries and equipment, not in the hope to resell them at higher prices, but use them to make money in the future.

Some people buy suits in Hugo Boss for $10,000 each, while G-2000 across the street has similar offer for just $1,000. Are they nuts? The $1,000 suit is a consumption, value for money. The $10,000 suit is for investment, for winning a prestigious job or a business contract. Is it worth it? It depends.

That also applies to going to high-rise restaurants. For a $100-plus set lunch, you get a salad with two skinny sausages lying on top of it, as the main course. i can hardly imagine it is a consumption, except for those who hate money. But if it is a lunch with a potential business partner, you would enthusiastically pick up the bill in the end.

People buy awfully expensive wine, golf club membership and wear Rolex watches. i don't think they are all morons.

Consumption can be investment. And investment can be consumption too.

Take education. It is commonly believed that education is an investment. People pay tuition fees and get a degree, in the hope for higher income in the future. However, some elderly, retired, people take degree programs too. To them, education is consumption, rather than an investment. They buy what they want and enjoy it.

Investment guru Lam Sum-Chee, in his new book, built a strong case on how tricks of warrant issuers put warrant investors in disadvantageous positions. i believe retail investors should know more about what they invest in. However, i bet that even if they fully understand what is going on, many of them would continue to play the game and accept the handicap. Are they insane? Actually, they are not investors, not even speculators. They are consumers. They buy hopes as well as entertainment.

Hong Kong doesn't need a casino, as long as it has a stock exchange.

Some people pay fortunetellers $150,000 to foresee their whole lives. It could be a decent investment, if that helps make the correct business decision, or career choice. On the last day of my life, i realize that what the fortunetellers said 50 years ago were all wrong. Does that matter any more? His words have comforted my fears of uncertainties for 50 years. i should have enjoyed his great service, as a consumer.

A little advertising here. If you see Quam's paid services as consumption, they are quite pricey. The subscription fee for the full advisory service is about $300 a month (20 working days). That's $15 a day. They are much more expensive than newspapers. But if you see the subscription as an investment, frankly, it is quite worth it.


Thanks for readers' suggestions about the reason tea restaurants have a $2 surcharge for cold drinks. SM shared his real-life experience in running a tea restaurant saying that the ice will add 20 to 25 cents per serving and the electricity will cost another 20 to 30 cents. Wastage can also be high on ice as it melts rapidly in the summer. Another reader ".." added that the syrup used in cold drinks is much more costly than sugar in hot drinks. Then, the surcharge seems to be quite reasonable. Thank all for your inputs.