Alternative Investment Strategy: Buying in Bulk

Brent Pittman —  06/02/2013
Buying in bulk as an investment? Photo Credit: Thomas Hawk via Compfight cc

Buying in bulk as an investment? Photo Credit: Thomas Hawk via Compfight cc

On my drive home from work I heard about an interesting alternative investing strategy that even Mark Cuban (billionaire) endorses.

“The money you save by investing in bulk will provide a better return on investment than any investment vehicle on the planet.”- Mark Cuban from NPR article

Buying in Bulk as an Investment Strategy

We can all agree that there aren’t many investments that are paying decent rates. Heck, savings rats (not mis-spelled) are at all time lows along with their money market cousins. More rats!

What can we do, but put it all in the stock market to hopefully keep up with inflation? You can forget about trying to keeping up with college inflation rates of 7%+.

Inflation is the pace car investors are trying to beat.- @ontargetcoach

Buying in bulk can unleash the current purchasing power of your dollar in anticipation of higher rates of common products.

Buying in Bulk: Smart Shopping or an Investment?

We already know buying in bulk from places like Costco and Sam’s Club will save us money on common items like bags of ice.

That’s just smart shopping, but could buying in bulk be considered an investment? Perhaps.

In the interview, economist Russ Roberts suggest buying items that will likely increase in price and that you’ll end up using like trash bags, laundry detergent, undershirts, toothpaste, etc.

Non-perishable items are best. [Random Thought: That would stink to have 50 gallons of shampoo in the basement and then go bald.]

If you already have a firm handle on your debt with an emergency fund in place AND inflation rates continue to outpace savings rates and money market funds, then buying in bulk could be a place to put some of your investments dollars.

For now, I’ll keep buying in bulk just for the cost savings and not an investment.

Though if I had an extra few hundred and came across a good deal, I might be convinced to “invest” in a socks and underwear for the next decade.

What do you think about buying in bulk as a viable alternative investment strategy? 

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Brent Pittman

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Brent is a financial coach and writer looking for the perfect donut. He believes personal finance should be both fun and accessible to anyone willing to learn.
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  • There’s no hard and fast rule when it comes to buying in bulk. I think it just depends on the items – if buying a particular item in bulk makes sense and has the potential to save a decent amount of money, then yes we should go for it.

  • John S @ Frugal Rules

    My wife was just telling me about that article. I think it may be possible, but could be tricky to balance. We go to Costco and will stock up on some deals that are actually good, but there is only so far we can go with it. Our house fills up easily enough as it is without filling it with 10 cases of TP because we were able to save a few bucks. We take advantage of the savings and nothing really beyond that.

    • Yeah, we don’t ‘hoard’ much either. but it is interesting to look at buying in bulk as an investment rather than a smart purchase. Makes us take a good look at what investing really is.

  • This is interesting. I don’t buy much in bulk because I have done a very detailed analysis and I save more money at Target then I do at Costco. That is just what I have found, but it is also because of what we shop for.

    • I always thought Target was fairly expensive. Did you write an article on your analysis?

      • I did the analysis before I had my blog, so I don’t have the numbers anymore, but with the membership fee of the bulk store, Target won on the items that we purchased on a regular basis. That was all that was important to us.

  • Darn it! I have half a post written on this topic that was scheduled for Friday. Now I need a new post idea…

  • I guess it depends on what you do with the savings. If you can save 10% on something and you put that money directly into savings, then I guess that could be considered an investment with a 10% return. But if the savings are just spent on something else, then it’s definitely not an investment.

    • I wouldn’t classify it as an traditional investment either. It could help defer costs over the longterm though.

  • krantcents

    I would never buy in bulk unless the discount is enough and I would use the product in a reasonable amount of time. For example, I would not want to buy a years worth of razors just because I might save 10%.

    • I wouldn’t either, but I then again I grow a beard in the winter.

  • Tie the Money Knot

    I think it’s a great way to save money. Really, if we look at it in totality, whether saving or investing, we want to see our money grow. This is another vehicle by which we can do that, as long as we keep our other expenses constant of course!

  • I don’t think I would ever view it as an investment per se, maybe more of a hedge fund against the future rise in prices.

  • Jules@knsfinancial.com

    We buy toilet paper and paper towels in bulk knowing we will use them eventually. Never thought of it as investing though, interesting spin:)