Comment by xyzelement | Hacker News Reader

Comment by xyzelement | Hacker News Reader

As a finance person and someone who grew up poor and economizes by default - I mainly agree. An investment is something that (has a shot of) paying you more than you paid for it.

From that point of view, a house is a speculative investment (there's a chance it will go up but also may not) while a car is definitely not an investment (short of very crazy things happening, value declines very quickly with time.)

So I agree with the author that saying something like "I invested in a bottle of booze because booze will make me happy" is an abuse of the term investment.

However, now that I am a bit grown up and have a wife and kids, I look at the concept of investment in a broader sense. To me investment is anything that will give me/my family something important and less nebulous than happiness but not as concrete as money.

For example, we just paid more for a house than we would have because it's walking distance to family. There may be some minor financial benefits to this but is not the point - we didn't do it to save gas money visiting them.

But I see it as an investment of a sort. I care about my kid, and I think it's good for him to grow up seeing his cousins every day. I know my wife is very happy to be near family. So while it's not a financial investment, I do see it as an investment into my child and family and that feels kinda like a real thing.

I still think of a car as an investment, although you don't get your return from selling it. You get it from using it. Compare the depreciation + fuel + insurance with the cost of a monthly train and bus pass and occasional cab/Uber when the train/bus doesn't take you to where you need to be.

And depending on locality, a car can get you to a better paying job (or a job period). So having the car brings you returns on your investment every paycheck. Well, the car + your time at the job + your time and expense in education that made you qualified for that job and pay level.

But if this standard is applied then we end up with (imo) facially silly arguments like "a sandwich is an investment because I need sustenance to live and if I stop living I cannot work."

A lot of words can seem tortured if we try to make them work in some way they just don't.

People don't usually say they will invest in something that will imminently be used up. It can be food, but only if you're going to hold onto it for a while, e.g. disaster prep. They do say things like "I decided to invest in a new suit." There is a rule here though I'm not sure what it is. Perhaps the etymology[1] is helpful (but also perhaps not and it's just misleading).

Anyway, this usage isn't necessarily rendered invalid because some domain has a more specific and contradictory definition, much as botanical fruits don't make tomatoes any less of a vegetable in the kitchen.

[1] https://www.etymonline.com/word/invest#etymonline_v_12190

That's operating expense not capital expense.

Car and crazy things: in Brazil during our last hyperinflation period, people literally bought cars as an investment, because often used car prices were just slightly behind a new car price, while other methods of investment had literally lower returns than that.

A lot of people became car flippers too, bought used cars, repaired them, improved what could be improved, and sold them back, if done right sometimes for amounts that were ludicrously much more than they paid.

Suffice to say, rampant inflation is NOT pretty.

Your first two statements are contradictory. A car "has a shot of" (I assume this means a non 0 probability) of paying you more than you paid for it. You then admit there is a non 0 probability but say it "is definitely not an investment".

If you replace "has a shot of" with "is expected to" then I agree with what you are saying. That being said, decisions aren't made in a vacuum and payoff not strictly tied to the underlying asset. So, a bike to deliver newspapers, a backhoe to dig for treasures, or a laptop with Adobe Creative Suite could all be considered investments.

Your last point is essentially the concept of utility. More abstractly, you are investing in your children by spending money now to raise them with good values in hopes that it brings them more utility later.

I agree with your last point. I do think that the term investment applies even when you're investing to gain something (utility) rather than $.

I do agree that if you're buying a car because you think it will be a collectible, or you will use it to drive Uber and make more money, it's an investment.

My point is that most people who buy cars do NOT buy then with a plan to make money off of them, but still casually refer to investing in an asset, which isn't appropriate.

> short of very crazy things happening

A colleague of mine bought a relatively new car back in 2019 and resold it for the same price a few months back.

So we are currently in the world where crazy happens.

Agreed - we just bought a new car and it was out of the question to buy used because the prices were almost the same.

But I think the point stands - your friend likely did not buy this car in 2019 planning to sell it for more so it's not an investment.

(on the other hand, if he had anticipated covid and the chip shortage and bought cars expecting to sell them for more, that would be an investment - but that's not what people are doing)

> while a car is definitely not an investment

It depends on the type of car, but certain, usually very expensive, cars still do gain in value over time. This is one of the ways the system starts working for you instead of against you once you are rich (if you are smart about it). When I found out about this, I started to see rich people having garages full of old timers in a different light: it's just a different way of investing money.

Sure. If you're buying "a thing" because you expect it to go up in value, you're indeed making an investment. Can be in cars, wine, whatever. Sure, your intention may not pan out, but you're in it for the money.

On the other hand, most people who buy cars to use as transport for X years and expect to either drive them into the ground or sell back at a fraction of value, aren't investing.

Indeed (most of) the cars for the masses aren't investment objects. The technology gets obsolete, and nobody wants to buy them from you at higher prices.

The trick is to buy investment grade stuff. That’s probably not possible with say tvs but we’ll used cars (Taco, 4Runner, land cruiser, certain Jeep’s) can be a decent investment in that depreciation may only be equivalent to how much you use it offset by increase of value . Same is true for many tools or high quality used items. If you buy correctly you can see almost no deepreciation over your ownership.

Even consoles can be an investment in this odd time, due to shortage I sold my Switch for 100 more than I bought it used. Video games can be flipped at almost no loss if done within the first 2 weeks etc.

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