Two Kinds of Investments
Apr. 24th, 2010 09:39 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
livingdebIt occurs to me there are two kinds of investments: the kind that increase income and the kind that reduce spending.
Investments that increase income
* savings accounts - you get interest
* bonds - same
* stocks - capital gains (ideally) and dividends (maybe)
* book publishing - royalties
* real estate - rental income
* annuities - some other kind of income
* job tools - increase efficiency and thus money earned per hour
* start a side business - earn more income; maybe sell the business later
These are the kinds of investments people usually talk about because they are awesome. The risk with these is that the income can be unpredictable. This is really the only kind of investment you need, if you have enough of them, but it's not the only kind there is.
Investments that reduce spending
* buying a house - reduce spending on housing
* buying a smaller house - reduce spending on taxes, repairs, and utilities
* weatherizing your house - reduce spending on utilities
* energy- and water-saving appliances - reduce water and energy costs
* manual tools - reduce electricity usage
* reliable, well-built items - reduce or eliminate repair and replacement costs
* native plants - reduce spending on water and fertilizer
* toothbrush, floss, toothpaste - reduce dental costs
* pantry - reduce cost of perishables--now you can buy them in bulk or when they are on sale rather than only when some space has opened up
* (longish) skirts instead of pants for little girls - you don't have to replace skirts as often as pants because they take longer to grow out of
* pots and pans - reduce cost of feeding yourself by cooking some of your own meals
* pets - reduce therapy costs
* carport or garage - reduce chance of hail damage
My favorites are the ones that could eliminate costs forever:
* knife sharpener - never buy another knife
* lawn mower - stop paying for lawn service
* trimmer - stop paying for hair cuts
* nail clippers and file - stop paying for manicures
* firm mattress - eliminate chiropractor visits
* glasses - stop paying for contact lens solution
* digital camera - no more film developing
* metal roof - never replace your roof again
Investments that increase income
* savings accounts - you get interest
* bonds - same
* stocks - capital gains (ideally) and dividends (maybe)
* book publishing - royalties
* real estate - rental income
* annuities - some other kind of income
* job tools - increase efficiency and thus money earned per hour
* start a side business - earn more income; maybe sell the business later
These are the kinds of investments people usually talk about because they are awesome. The risk with these is that the income can be unpredictable. This is really the only kind of investment you need, if you have enough of them, but it's not the only kind there is.
Investments that reduce spending
* buying a house - reduce spending on housing
* buying a smaller house - reduce spending on taxes, repairs, and utilities
* weatherizing your house - reduce spending on utilities
* energy- and water-saving appliances - reduce water and energy costs
* manual tools - reduce electricity usage
* reliable, well-built items - reduce or eliminate repair and replacement costs
* native plants - reduce spending on water and fertilizer
* toothbrush, floss, toothpaste - reduce dental costs
* pantry - reduce cost of perishables--now you can buy them in bulk or when they are on sale rather than only when some space has opened up
* (longish) skirts instead of pants for little girls - you don't have to replace skirts as often as pants because they take longer to grow out of
* pots and pans - reduce cost of feeding yourself by cooking some of your own meals
* pets - reduce therapy costs
* carport or garage - reduce chance of hail damage
My favorites are the ones that could eliminate costs forever:
* knife sharpener - never buy another knife
* lawn mower - stop paying for lawn service
* trimmer - stop paying for hair cuts
* nail clippers and file - stop paying for manicures
* firm mattress - eliminate chiropractor visits
* glasses - stop paying for contact lens solution
* digital camera - no more film developing
* metal roof - never replace your roof again