POSTED BY March 2, 2014 9:48 am COMMENTS (8)ON
Well, this is not so much of a question to Ashal, Manish & Co, but a general question for readers to think about.
When I think of investment my thoughts are on putting my money to work so that it will give me returns greater than what I initially invested. Now, for it to return a higher value than originally invested, it has to increase in value itself, and not just value in terms of Dollar/Rupee amount (i.e. price), but what good is it worth for and/or how much value it can give in the future.
So if I buy a chair for Rs 100, it is a chair worth Rs 1000 (hopefully not less), but that is all it is. If I leave it as it is for 10 years and then sell it for Rs X more than or less than Rs 1000, is there a change in value of the chair? I would say the change is in price and not value because the chair has not turned into something else. The chair is still a chair thats only good for sitting on – same as it was 10 years back. So the change in price (not value) of the chair can only be attributed to inflation and value of money. There is no change in value unless the condition of the chair has deteriorated.
I hope till here everyone will agree with me. I hope everyone will also see this a simple trade (purchase and sell) for what is the price one can get for the chair rather than an investment
But what puzzles me is how people see the purchase of real estate and gold as investments rather than simple trading (with hopes of selling at a profit). When you purchase a land or house and sell it after 10 years – does the value of the estate change or does only its price change? Same for Gold which is not even a useful asset to start with.
When so called ”investing” in Gold or Real Estate, aren’t all we doing is buying at a price and selling at another. We expect the price to increase of course but due to what reasons – supply and demand factors or simple inflation and change in value of money?
Is that what is really considered investment? Or is it just blind speculation and trading?
Next, if you believe in long term value investment (over day trading) which is something everyone loves to claim, how do you manage this conflict when doing trading with real estates and gold?
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