Let's say there's something whose cost is ₹500. You have use for the item, but you can also manage fairly right now without it. However, it's confirmed that you'll have to buy it sometime in the future. So should you buy it right now, or should you buy when you really need it in future? What's an economically smarter decision?


Well, it depends upon your investment style & Inflation.
Let's say you don't buy it now, and invest that ₹500 somewhere. In 2 yrs , if your investment grows by 20% (becomes ₹600), but inflation is higher and the item becomes ₹700, you will no longer be able to buy it (or will have to put more money). In that case, it's better to buy now rather than after 2 yrs.
On the other hand, if you're a better investor and can manage to outpace inflation, it's better to postpone and buy after 2 yrs. Let's say your 500 bucks become ₹900, but the item only gets to ₹700, so you'll be able to not just buy it, but also save the surplus ₹200!

Of course, there can be other human factors, especially risk factor & availability concerns , in this decision. However, I've tried to make a purely economic analysis, keeping other factors constant or negligible.



#decision #economics #money #finance #buy #dilemma #randomthoughts #life

© Adarsh Bhardwaj