Paying Up
“Price is what you pay, value is what you get”
Though the above is a quote many directly attribute to investing in stocks, it’s a model for any kind of investment. The quote came to mind as I explained how I was able to purchase a business class flight from Toronto to Vancouver for $37 and 25k airline points (which is about ~$525 when converted for monetary value).
I, like most, love a great deal and not all deals are equal. Some of the best deals come from optimizing credit card points. This all seemed like a lot of work to my friends and it dawned on me that there was also a difference in investing philosophy, whether they realized it or not.
It’s as simple as when one would buy clothes. I waited ~3 years before buying a jacket recently. It had to have the “right” fit, colour, style, material, etc… An optimal jacket. The purpose was to pay for a premium jacket that would render the need to purchase 3-4 different jackets of individual function useless.
Most of my friends would gawk at the price of $250+ for this jacket but I also didn’t spend any money for three years on some sub-par substitute and the intention is to not spend any amount in the foreseeable future on another jacket either. Though the individual price was high, the value would far outweigh the alternative scenario of buying/storing/decision fatigue of owning 3-4 jackets. This is case specific to me and is similar to how I travel.
I have friends who would love to stay at a cheap Airbnb for $50/night if the value they saw of it would be $100. Instead, I would rather spend $100/night for accommodations valued at $1,000. On an absolute basis, the cheaper place means you spend less but when I travel….there are so many things to factor into an experience and a 5-star hotel with a full gym makes my travel experience ever more valuable.
This is the mindset required for what a friend who is a travel consultant called luxury travel. The point isn’t to get things for free but spend a little to get a lot. The time I put into scheduling purchases and getting specific credit cards (many with $100+ in annual fees) are a small cost when compared to how I can travel for two weeks in Germany in 5-star hotels without paying a penny to the hotel operator.
Whether it’s clothes or the full travel experience, it’s not always about the absolute price but the value one gets for it. At least, that’s one way of viewing every purchase as an investment that could yield greater future value. Paying up doesn’t seem to be a common mentality and I'm not saying it is the ‘absolute right’ mentality in any way but it shouldn’t be ignored.