NPR’s Uri Berliner is taking $5,000 of his own savings and putting it to work. Though he’s no financial whiz or guru, he’s exploring different types of investments — alternatives that may fare better than staying in a savings account that’s not keeping up with inflation.
Mark Cuban is a billionaire, so it may be a surprise that the owner of NBA’s Dallas Mavericks purchases everyday items like razor blades and toothpaste in bulk batches. It’s stuff he knows he’ll use in the future.
Here’s the thinking behind bulk buying: Purchasing goods in volume is cheaper than buying them one at a time. You save on transaction costs like driving to the store. If your money in a savings or checking account is losing value to inflation — as it would be right now — why not spend some on everyday items you know you’ll need?
I emailed Cuban about his strategy. This is what he wrote back:
“The money you save by investing in bulk will provide a better return on investment than any investment vehicle on the planet.”
I found Cuban’s thoughts on bulk buying intriguing and a good fit for my investment adventure. So I called up economist Russ Roberts, a research fellow at Stanford’s Hoover Institution, to help me fill my cart at a Costco in Washington, D.C.
Inflation is low these days, running at a 1.7 percent annual rate. Still, it outpaces the return on a savings account. Roberts says if inflation starts rising, to say, 5 percent, the argument for bulk buying becomes more powerful. “Do you have an investment now that pays 5 percent? The answer is: not easily,” he says.